How to close a personal loan early?

When you sign up for a loan after receiving approval on your application, your agreement contains the mutually agreed upon tenure or repayment duration. However, there are several reasons why you may want to pay off your loan early.

You may have received surplus funds, returns from investments or a bonus from work. The reason could be anything, closing your loan before the chosen tenure can actually reduce your debt burden and improve your credit score. If you have received a windfall, such as a bonus or an inheritance, you can use it to pay off your loan in full. Closing a personal loan early can also help you in saving money on interest payments.

The process of closing a personal loan application early can vary depending on the lender. However, there are a few general steps you can follow.

How to close personal loan early:

There are 4 simple steps to follow in order to close your loan:

1. Check your loan agreement: Make sure to read the documents related to your loan carefully to understand if there are any prepayment penalties or fees. This will help you understand any costs associated with closing the loan early.

2. Contact your lender: Discuss your options for paying off your loan early. Some lenders may allow you to make additional payments without penalty, while others may require you to pay a fee or penalty for prepayment.

3. Calculate the payoff amount: The payoff amount is the total amount you need to pay to close your loan early, including the outstanding principal and interest.

4. Make the payment: Usually, you can do this online or offline. But in today’s time, mostly it’s online depending on your lender. So, you can find a convenient means to do the payment.

By following these steps, you can successfully close your personal loan early.

Tips to pay off your personal loan early

Paying off your personal loan early may consist some of the pros and cons. However, here are some tips to help you to understand and decide a cost-benefit analysis.

1. Make extra payments whenever you can: If you get a bonus at work or come into some unexpected cash, consider putting it towards your loan. These are called prepayments and doing this can help you pay off your loan faster and save money on interest in the long run.

2. Refinance your loan: If you can find a better interest rate or loan terms, refinancing your loan can help you save money and pay it off faster.

3. Avoid late payments: Late fees can add up quickly and make it harder to pay off your loan. Set up automatic payments or reminders to help you stay on top of your payments.

Now that you know how to close personal loan early, you can start planning for it.

At Fibe, you don’t have to bear any pre-payment charges or share any documents. You can simply log in to Fibe app or on the website and repay your loan.

FAQs on how to close a Personal Loan early

Is it better to close a personal loan early?

Closing a personal loan early depends on your finances. Doing so can benefit you as it may help you save on interest, relieve you of debt and also improves your credit score. However, some lenders levy prepayment charges. It is better to go through repayment policies before you decide to close your loan early or opt for one.

What documentation do I need to provide in order to close a personal loan?

To close a personal loan with Fibe, you do not require to submit any documents. Simply, log in to our app or website and complete the payment procedure. What should I do if I am having difficulty making payments on my personal loan? If you’re having trouble making payments on your personal loan, the first thing you should do is contact your lender and explain your situation. They may be able to offer you options such as deferment or personal loan settlement.

What are pre-closure charges?

Pre-closure charges, also known as prepayment charges, are fees that some lenders charge when you pay off your loan before the end of the term. These charges are typically a percentage of the outstanding loan balance and vary depending on the lender and the terms of your loan agreement. Fibe doesn’t charge anything if you wish to pay off your loan early.

Does early closure of loan affect CIBIL score?

Yes, early closure of a loan can affect your CIBIL score. If your credit score is low, this can help increase it. If you have a good payment history and don’t have a lot of other outstanding debt, it may not have a significant impact on your score.