All you need to know about Personal loan part payment and pre-closure
Are you in need of cash? Don't have any asset to pledge as collateral? Well, maybe you could consider a personal loan. A personal loan is a collateral-free, security-free loan, which is granted solely on the basis of your credit history and salary. It has a hassle-free application process and the loan amount is generally disbursed as soon as you are found to be creditworthy.
A personal loan is one of the costliest loans in the market. It comes with high-interest rates since the lender doesn't have any collateral as a backup in case of default. A dented credit history would only lead to a rejected application or a higher interest rate. Each loan rejection adversely affects your credit score with spiraling effects.
Personal loan verification procedure
There are 4 stages to personal loan verification:
Loan application is received by the lender
Once the lender receives the online/offline loan application, the lender initiates the collection of the complete set of documents. this is the first step.
Document collection process
Once the bank receives an online or offline loan application, they usually send a representative to the applicant to collect the documents required. The documentation is usually simple; lenders usually require KYC documents, income proof, passport size photographs and a filled loan application process to process a personal loan.
Documents verification process
Once the mandatory documents are collected, the personal loan verification procedure is initiated. Then the actual personal loan verification procedure begins. The bank takes a couple of days to analyze the documents provided and makes sure that all the documents are in order before forwarding it to the verification department. Banks have their in-house verification team who send representatives to the applicant's residence or workplace to verify the documents. If the verification result is positive, the bank processes the loan application. If the findings are negative, then your loan application is declined.
Approving the personal loan application
Before approving your personal loan application, the lender obtains your credit records from the bureaus to study your credit history. If your credit health is in good shape, the lender approves your application and a loan agreement is drafted. It is at this stage that you are called to the branch and asked to sign the documents. The agreement contains important information regarding the total loan amount, the interest rate and type, the tenure of the loan, processing charges if any, and other terms and conditions of the loan. Once the applicant signs on the dotted lines, the personal loan amount is disbursed within 72 hours to the bank account specified in the application form.
Personal loan part payment
The advantages of a personal loan negate its disadvantages. You can part pay or pre-pay the personal loan amount after paying a certain number of EMIs.
If you happen to have a lump sum of money remaining idle but which is not equivalent to the outstanding amount, you can consider part paying your personal loan. Part payment could lower your monthly EMI outgo and also lower the amount you pay towards interest. Keep in mind that this only works when you make a significant part payment, as it brings down the principal amount. Making a very small part payment towards your personal loan does not help. Also, this could attract charges from the lenders.
Personal loan pre-closure procedure
If luck is in your way and you manage to save the entire principal outstanding, then you could perhaps consider preclosing your personal loan. If you do the prepayment in full, early on in your loan tenure, then you can save a lot on the interest. A personal loan generally has a lock in of about one year after which the entire outstanding amount can be prepaid, effectively preclosing the personal loan.
If you decide to pre-close your personal loan, follow the mentioned steps:
• Contact your branch where you have your loan account. Make sure you have all your documents at hand. It is advised that you carry your chequebook.
• Meet the relationship officer and express your desire to pre-close your personal loan.
• The loan officer will calculate the outstanding amount along with applicable penalty charges (which is usually 1–2% of your outstanding amount) and you will be required to submit a DD/cheque.
• The lender will process your cheque /DD and the amount will be deducted from your bank account.
• Make sure you collect the pre-closure acknowledgment receipt. Confirmations on pre-closure are usually received from lenders within two weeks.
Personal loan pre-closure calculator
You can use a personal loan pre-closure calculator to calculate how much you owe to the bank, along with the penalty charges. There are several online resources that offer a personal loan, pre-closure calculator.
Apply for a personal loan
Are you looking for a personal loan? If so, you have approached the right place! You can check your eligibility and apply for a personal loan by signing up with CreditMantri. It is quick, simple and above all, free.
CreditMantri matches your credit and demographic profile to the lender's lending criteria and presents you a shortlist of only those lenders willing to lend to you based on your unique credit profile. In effect, we pre-screen your application to make sure you are likely to qualify as per the lender's credit criteria. Hence, the chances of your personal loan application getting approved are higher.
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