Why Opt for Preclosure of Personal Loans?

Preclosing a personal loan can reduce your debt burden and save on interest costs. If you have been consistent in monthly payments, it can also reflect positively on your credit score. However, there are other factors to consider such as preclosure penalties, having to dip into personal savings in case of unexpected expenses, and a shorter credit history.

How are foreclosure charges calculated?

Pre-closure charges are determined by the number of EMIs paid on the date you choose to pre-close the account.

Does foreclosure of a personal loan affect my credit score?

If you already have a good credit score and history, foreclosure may not have a significant direct impact. However, it will show lenders that you have a continued history of timely payments. On the other hand, if you are in the process of building a strong credit history, foreclosure may not be the best option. A foreclosure will shorten your credit mix and history while repaying over the tenure will help you build a stronger history and score.

Personal Loan Pre Closure

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Personal loans from SMFG India Credit is a popular financial product among our customers. Based on your financial profile and credit score, we offer the best personal loan interest rates that can cater to your loan requirement.

Even though the usual repayment tenure runs a course upto 5 years, many of our customers consider pre-closing it to save on additional interest prior to the loan’s maturity date.

Personal Loan Pre-closures

At SMFG India Credit, we provide our customers with the following options to make any personal loan balance transfer before the term of the agreement expires.

Post the mandatory 6 months to a 1 year lock-in period after the loan has been sanctioned, our customers at SMFG India Credit can save on their monthly instalments by clearing the loan before the end of its full tenure.

Personal Loan Pre-closure Charges

Pre-closure charges will be applicable on opting to repay the loan in its entirety after completion of the lock-in period. This is determined on the number of EMIs paid date you choose to pre-close the account.

The pre-closure charges for personal loan are as follows:

No. of EMIs paid (Excluding Pre-EMI)	Foreclosure Charges
0 to 17 EMI(s) fully paid	7% of the Principal Outstanding
18 to 23 EMI(s) fully paid	5% of the Principal Outstanding
24 to 35 EMI(s) fully paid	3% of the Principal Outstanding
36 or more EMI(s) fully paid	No Foreclosure Fee

Please note that as per our current policy, we only accept prepayments on personal loans in full. Thus, if you wish to prepay or foreclose your personal loan, you must be prepared repay the entire outstanding amount along with applicable fees and charges.

We, at SMFG India Credit, offer our customers the option to pre-close their personal loan account before the tenure period. If you’d like to do the same, you will need to have the following documents.

Documents Required To Pre-close Your Personal Loan

All your loan related documents
A valid identity and address proof such as Aadhar Card, Voter ID, Passport, etc.
Your latest loan statement
Cheque or demand draft for the outstanding loan amount

How To Pre-close The Personal Loan Account

If you have decided to pre-close your personal loan account with SMFG India Credit, then you need to follow the given process.

Visit your nearest SMFG India Credit branch office
Request for a personal loan pre-closure form
Fill it out the form, sign and submit it attaching the necessary documents
Prior to closing the account, we will verify your identity; therefore, make sure that you carry the right ID proofs with you along with the cheque or demand draft
Pay the outstanding amount along with applicable foreclosure fees
On closing the loan account, a NOC or a No Objection Certificate will be issued from SMFG India Credit that will act as proof of closure

Get In Touch With Us

If you have any further questions with reference to personal loan pre-closure, its fees, charges, etc., you may get in touch with us by calling SMFG India Credit’s customer service toll-free number - 1800 103 6001. Alternatively, email us on for more information.

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* Please note that loans are disbursed at the sole discretion of SMFG India Credit. Final approval, loan terms and disbursal process will be subject to SMFG India Credit's policy at the time of loan application. If you are an existing customer and wish to foreclose your loan, please note that foreclosure terms and charges will be applicable as per our policy at the time of loan foreclosure.

FAQs

Which will be better for my credit score? Making a foreclosure or repaying the loan over the tenure?

While both options have their benefits, you should opt for repaying the loan over the tenure to build a longer credit history. A long history of responsible repayments has a positive impact on the credit score.

Foreclosure can also be an indicator of responsible payment behaviour and reduce your debt which is also beneficial for credit scores. However, this will shorten your credit history and some lenders may also charge fees for foreclosure. It is important to weigh both sides carefully and choose the option that best suits your financial goals.

What is the Personal Loan Foreclosure Process?

Here are the steps to follow for the foreclosure process:

Initiate a formal foreclosure application by contacting our customer service representative through phone, at a branch, via email, or by submitting a request through the customer service portal or mobile app.
Once your application is received and processed, you will be given an estimated date for the allocation of a foreclosure ID.
Upon receiving the foreclosure ID, you can proceed to make the payment at the nearest SMFG India Credit branch.

After completing the payment, you will receive an acknowledgment receipt and the foreclosure process will be finalized.

What are pre closure charges as per RBI guidelines for personal loans?

The pre-closure charges for personal loans are:

7% of the principal outstanding for 0 to 17 EMI(s) fully paid
5% of the principal outstanding for 18 to 23 EMI(s) fully paid
3% of the principal outstanding for 24 to 35 EMI(s) fully paid
No foreclosure fee for 36 or more EMI(s) fully paid.

Please note that as per our current policy, we only accept prepayments on personal loans in full. If you wish to prepay or foreclose your personal loan, you must be prepared to repay the entire outstanding amount along with the applicable fees and charges.

Is it good to foreclose a personal loan?

When choosing to close a personal loan early, you should take your monthly costs and financial situation into account. If you can afford to pay off your debt early, you can choose to foreclose. It can increase your credit score, reduce interest payments, and free up cash flow.

However, it is typically not a good idea to utilize all of your funds to pay off your personal loan early because unforeseen costs might crop up at any time and you may need to use your savings to cover those urgent bills.

Additionally, if you wish to end your personal loan before the specified tenure, you may have to pay some foreclosure fees/charges. Foreclosure also shortens your credit history. A longer credit history showing timely repayments can be beneficial for your credit score.