A personal loan is an unsecured loan as the borrower does not need a security to guarantee its repayment. Usually, personal loans have the high rate of interest. If you need cash urgently, a personal loan is the best choice for you. Generally,personal loans have an interest rate that varies, according to https://www.creditseva.com.
Closing a personal loan: To close a personal loan must always be one of your foremost priorities while you are thinking to cut down your debt burden.
An amount is given to an individual for personal use that must be paid off at a specified time. Personal loans are often more difficult to get and have strict qualification requirements.
Pre-payment of the personal loan at any point in time is advisable if the person has funds to spare. The personal loan interest rates are so high that no investment would be able to generate such returns.
Types of personal loan closures: Pre-closure; regular closure; bad loan closure, and settled loans closure.
Pre-closure: It is required to ask for a future date pre-closure statement. After that a cheque has to be signed for that particular amount and thus the closing of your loan will be done successfully.
Regular closure: If a personal loan is closed after the completion of the loan tenure, it is considered a regular closure. In such a case, a loan is closed in a regular manner without much difficulty.
Bad loan closure: If you fail to repay a personal loan on time, it becomes a bad loan. Closing a bad loan will cause a delay in reducing the debt burden.
Settled loans closure: This segment of loan closure reflects the loans that have been settled. In such scenario, the borrower is tagged as settled and it gets recorded. Eventually, the borrower has to get away with this tag for a better future of credit.
Procedures for closing personal loan:
Mentioned below are the steps that explain the procedures for closing a loan.
Loan closure at the end of tenure: After the payment for the entire term of the loan, your loan account will undoubtedly get closed by the bank. Whenever you have decided to close a loan, the most primary thing you need to do is to inform the bank that you are willing to close the loan.
Documents to be taken along while going to the bank are the following: Loan account number; the amount that is to be paid by cheque/cash; and xerox copy of ID proof.
In case there are pre-closure charges, you will have to pay a penalty.
After giving the cheque, the bank will provide you with an acknowledgement. This has to be kept securely till the loan gets closed.
If the time period between the loans closing date and Equated Monthly Instalment date is very near, even then the EMI will be deducted. Nevertheless, it will be returned in 10 working days.
The reduced EMI will be returned back with interest paid on it.
Once you have paid for the full term of the loan, your loan account will automatically be closed by the bank, unless you have applied for a top-up.
Loan closure by prepayment: An alternative way to close a loan is by prepayment. When the complete amount of your loan account is paid before the end of its tenure, it is known as prepayment. In order to adopt the prepayment method, the following specifics have to be taken care of.
After giving the cheque, the bank will provide an acknowledgement. This has to be kept securely till the loan gets closed.
Usually either a particular percentage of the principal loan amount or an outstanding interest for the unexpired tenure of the loan will be charged as prepayment fee. The final amount of the prepayment fee will be decided depending on the lowest amount of the above two factors.
Preferably, the prepayment is done by visiting the bank personally. You will need to carry your bank statement, which will have a record of the last EMI’s payment transaction. A letter needs to be requested that has to have the signature of the loan applicant, card details and the amount that has to be paid.
There is also a need to carry the prepayment statement for the personal loan when you go to the bank.
You can make the payment either through cheque, demand draft or cash.
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