Bank Loan Rules: Does everyone have to pay foreclosure charges on premature loan repayment, know the rules.

Till a few years ago, bank loan was considered a burden in India. But, today it is being considered a convenience. Now people take loans from banks for all their small needs. Loans like personal loans, and car loans are short-term, but home loans can be taken for a long period. You can repay the loan taken from the bank in installments. Many people repay the entire loan even before the stipulated loan period. The premature closing of a loan is called Loan Foreclosure in banking language.

In this, the loan taker pays the entire outstanding loan amount in one go. If you intend to repay the loan before time, then you should keep some things in mind. First of all, know that you get this facility only after paying some EMI on the loan. Second, you may also have to pay fees at the time of loan foreclosure.

Who does not have to pay foreclosure charges?

The option of loan foreclosure is available for personal loans, education, business, two-wheeler car loans, etc. The special thing is that not everyone has to pay foreclosure charges. According to the rules of the Reserve Bank of India, if you have taken a loan on floating interest and you repay the loan on time, then you will not have to pay foreclosure charges. A foreclosure charge is levied only on premature closure of the loan taken on fixed interest.

Why is this charge imposed?

Foreclosure charges are different for every bank, the burden will be less, but the bank incurs loss due to this. That's why they charge for it. If you repay the loan prematurely, the interest foreclosure charge on you usually remains up to 5 percent on the outstanding amount. This charge is written in your loan agreement. Please check this condition before taking a loan.

Benefits of repaying the loan before the time

There are many benefits of repaying the loan before time. You have to pay less money as interest. Due to the absence of debt, a person does not remain mentally troubled. Credit score also becomes stronger by repaying the loan before time.

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