Loan Fore-Closing: Is it right or wrong to pay the loan before time, know the advantages and disadvantages
Loan Updates: Till a few years ago, bank loan was considered a burden in India. But, today it is considered a facility. Now people take loan from the bank for their every small need. In such a situation, in today's news, we are going to tell you whether paying the loan before time is right or wrong, let us know the complete information related to this in the news.
Khabar TV (Bureau): When someone needs a lot of money at once, people often think about taking a loan from a bank. After taking a loan, you have to pay its EMI for a long time and along with this, a huge interest is also charged from you.
If your loan period is not over yet and you have enough money to repay it, then you can repay it before the stipulated period i.e. you can get the loan fore-closing done. If you do this, you will have to pay less interest to the bank.
However, you have to keep some things in mind while foreclosing the loan. Because if it has some advantages, it can also have some disadvantages. Today we are going to tell you whether foreclosing the loan is a profitable deal for you or a loss.
These are the benefits of loan fore-closing
When you pay before time, it saves the interest on the loan. If you have taken more than one loan, then you can first repay the loan whose interest rate is higher. In this way, you can repay personal loan, car or bike loan, credit card EMI etc. one by one. At the same time, you also have the option of transferring the loan. You can transfer your loan from a bank with a higher interest rate to a bank with a lower interest rate.
Many charges have to be paid for repaying the loan before time
Many banks charge customers for repaying the loan before time. If you are thinking of foreclosing any of your loans, you should first inquire about it in the bank.
Many banks charge 1 to 5 percent of the remaining loan amount. This is done so that they can compensate for some of the loss on interest. By calculating both the foreclosing charge and the interest on the remaining EMI, you can decide whether to repay the loan or not.
Do not forget to get the NOC certificate
After fore-closing the loan, you must take a NOC certificate from the bank. This certificate is proof that you have paid off the loan. Apart from this, NEC i.e. Non-Encumbrance Certificate has to be taken for the transaction details of all matters related to home loan or property.
After paying off the loan, you also have to ensure that your CIBIL score is updated on time. Because it normally takes a lot of time to process, which can affect your CIBIL score.
Does it affect the credit score?
Prepaying a loan does not have an immediate effect on your credit score, but repaying the loan can increase your score in the long term. On the other hand, part payment does not have any effect on the credit score.