There are three ways to repay a personal loan. Regular closure, pre closure, part payment. Information about these three methods should be taken from the bank while taking a personal loan.
Taking a personal loan is considered the best option in case of sudden need of money. While taking a personal loan, information about pre-closure and part payment or partial payment must be taken. Today we will tell you about these two. Actually, personal loans can be closed in three ways.
This customer pays EMI every month. EMI is closed after payment in full.
After the last installment of the loan, the bank should be approached for loan closure.
You can also talk to customer care for this. Apart from this, talks can also be done through mail.
When a person pays a loan before the end of the loan term, it is called pre closure.
Some institutions charge pre-closure of loan.
There are different lock-in periods in banks, before which one can close the loan.
Banks charge a pre-closure charge to cover the loss on the interest amount.
Banks have different rules regarding this
Many banks do not charge any charges for pre-closure.
If you want to do a pre closure then you should talk to the bank.
If you want the loan to be paid as soon as possible, then partial payment can be made in between.
Partial payments have two advantages: your EMI will decrease or the loan period will decrease.
What is the effect on credit score
Keep in mind that banks also charge for partial payment or prepayment closure, so the net profit in interest is much higher than that charge.
Experts say that the immediate effect of pre-closure is not visible, but in the long run it has a negative effect on the credit score.
This option can be chosen if your credit score is already very good.
If your credit score is improving then pre-closure should be avoided in that condition.
Nidhi Malviya is fun loving girl. She writes at NoobFeeds about various topics related to Finance, Technology, Business etc.