Pre-closure or pre-payment is a process where the borrower chooses to pay his loan fully or partially before the due date. Before taking this step, the borrower should make sure that he has sufficient funds to close his loan early. It is also advisable that the borrower finds out with his lender if there is any penalty for pre-closing his loan. If the penalty is lower than the interest amount to be paid by the borrower, then it makes sense to go ahead with this option. In case the penalty is higher than the loan interest amount, you will end up paying a greater amount instead of saving your money.
HDFC Bank has a range of personal loan offers to support your financial needs, right from education, marriage, renovation, etc. at affordable interest rates that ranges from 11.25% - 21.50%. If you are a salaried person, HDFC Bank will allow you to pre-close or make partial payment before the loan closure period, but only once the borrower has completed 12 EMIs.
During the tenure of the loan, you can make a maximum of two part payments, wherein the two payments should not fall within the same financial year. No part payment should exceed 25% of the outstanding principal amount. And the prepayment penalty is the same for part payments as well as full payment.
The pre-payment charges for salaried applicants are as follows:
- You must pay 4% of the outstanding principal amount for 13 to 24 months.
- You must pay 3% of the outstanding principal amount for 25 to 36 months.
- You must pay 2% of the outstanding principal amount for more than 36 months.
Additional Reading: How Pre-closure of Personal Loan Can Impact Your Credit Score?