Things You Need to Know Before HDFC Personal Loan Preclosure

Most of the people are aware of the benefits of taking a personal loan. Though it attracts a slightly higher interest rate than the other kinds of loans, it is a preferred choice in times of sudden need for funds. As it is an unsecured loan, which means it doesn’t require collateral, the processing is often easy and requires less paperwork. Many people are also aware of the tool called HDFC personal loan calculator, which helps them to check the amount of EMIs prior to taking the loan. It helps them in deciding the amount that they can go for and the tenure of the loan.

While they know that they can preclose the HDFC Personal Loan, not many are aware of the exact procedure or the things they need to know before going for it.

What Is Preclosure?

Preclosure, as the name suggests, is closing something before the stipulated time frame. In case of preclosure of a personal loan, it means paying off a loan, either in part or in full, before the stipulated loan tenure ends. Preclosing a loan helps in getting rid of debt, thereby saving the interest outgo that you would have otherwise paid in EMIs. The HDFC personal loan prepayment calculator is the best tool to help you take a decision about preclosure.

Preclosure Terms of HDFC Personal Loan

Now that you know what is meant by preclosure you should understand the terms and charges of prepaying an HDFC personal loan. According to the latest terms and conditions of HDFC bank Personal loan,

Any loan that is availed on or after 1st of April 2018 can be prepaid only if a minimum of 12 EMIs are paid. It means if someone has taken a loan on say 1st of April 2018, he or she cannot prepay anything partly or fully until 1st of April 2019.
During the entire tenure of the loan, a maximum of two-part payments are allowed. These part payments should again be in a different financial year and in no case should fall within the same financial year.
You can’t make a prepayment of more than 25% of the outstanding principal amount.

Prepayment Penalty Charges of HDFC Personal Loan

Whether one opts for part payments or full pre-payment, the penalties remain the same:

For tenure greater than 13 months but less than 2 years, the penalty is 4% of the principal outstanding amount.
Any tenure greater than 25 months but less than 3 years attracts a penalty of 3% of the principal outstanding.
For a tenure that is greater than 3 years, one needs to pay 2% of the principal outstanding amount as penalty.

Documents Required for HDFC Personal Loan Preclosure

You might have used HDFC personal loan interest rate calculator and took a decision of preclosing your loan to save interest. When going for a preclosure of your HDFC Personal Loan, you should have the following documents available with you:

•Account Number: This is your loan account number, which is mentioned in all loan account statements. Note it and take it along with you. You can also find it using your net-banking facility in case you use it.

•Identity Proof: One government-issued identity proof is mandatory to carry. It can be an Aadhaar Card, PAN Card, Driving Licence or Passport.

•Cheque or Demand Draft: When making the payment, refrain from paying in cash. It is always advisable to write a cheque or get a demand draft in favour of the bank. It should contain details like outstanding loan amount and prepayment penalty.

•Additional Documents to Carry: Though they might not be required, it is better to carry along with you the loan approval letter and the latest loan account statement.

Additional Read: Merits of Availing HDFC Bank Personal Loan

Process for Preclosing the Personal Loan

As you have used HDFC personal loan calculator or HDFC personal EMI calculator to understand the amount of EMI, the principal and interest component etc. before taking the loan, it’s now time to get ready for the preclosure process. It starts when you decide to prepay it and then arranging for all required documents.

Once everything is arranged, visit your home branch with all the documents in order. You will be required to fill a preclosure form and the bank official will help you with the exact amount you need to pay. You can then write a cheque or get a demand draft for the said amount. Collect the acknowledgement receipt of the prepayment you made. The moment the amount gets processed, which mostly happens by the end of the day, your personal loan account is settled. In case you have gone with full prepayment, the loan closing document is issued, which you need to keep with you safely.

The HDFC personal loan calculator helps a person in deciding whether to go for a personal loan or not. Similarly, the HDFC personal loan prepayment calculator helps in deciding whether to preclose it or not. The entire process of preclosure is easy and simple if you are aware of the basic requirements of documents and penalty charges. As with the processing of personal loan, which requires minimum documentation, the foreclosure also requires you to carry few documents like the loan account number, any identity proof etc. It is a seamless process and the HDFC bank is consistent in its efforts to make the experience hassle-free for its customers.

Author Since: Jan 17, 2019

Anoop Bansal, a professional Chartered Accountant based in the National Capital - Delhi. I have worked for the top-notch Indian and International banking firms for the past 10 years. Currently, I work at emi-calculator.loan blog and a financial consultant for different SMEs in India. Follow me on Facebook, Twitter and Linkedin for more information.

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