Can I Close Personal Loan Before 1 Year?

Hi Arunima, you can pre-close your personal loan but not until you have completed a minimum lock-in period which your bank must have mentioned in the agreement. Usually, you must complete at least 6 to 12 EMIs to be able to preclose. As a credit analyst in a private bank, I can tell you one of the positive sides of preclosing your loan is improvement in credit scores. So, can we close personal loan before 1 year? It depends on your lender. 

Can We Close HDFC Personal Loan Before 1 Year?

No. Having taken a personal loan from HDFC Bank before, I can tell you this: you must complete a minimum of 12 EMIs to be able to pre-close your loan in HDFC. 

Here are some things you need to do or have to pre-close your loan from HDFC.

1. Must complete 12 EMIs to avail this option.

2. Clear the current month’s EMI, pending dues, and pay foreclosure charges

3. Pay the penalty fee, if any. Confirm this with a loan officer at your bank.

4. Visit the bank with the required documents, which will include a demand draft or cheque and pre-closure quote. 

5. You may also need to carry your loan-related documents, like loan approved letters, account statements, etc.

6. Fill a form or write a formal letter requesting for a pre-closure

7. Pay the amount to pre-close the loan.

8. You must also sign the documents 

That’s all the things you need to do or be eligible for to close your loan early in HDFC bank. Some banks offer an early closure, depending on their lock-in period. So do confirm this with your lender. 

So, that’s the answer for, can I close HDFC personal loan before 1 year.

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How to Preclose ICICI Personal Loan?

Pre-closure of a personal loan is possible if you’re in the early stages of your loan repayment tenure. I took a personal loan years ago for a medical emergency, and I wanted to close it sooner than the tenure. I didn’t know if it was even possible so I researched a bit and asked a few family members, can I close personal loan before 1 year? My cousin, who’s a bank employee, explained the process of preclosure to me.

Can We Close Personal Loan Before 1 Year?

My cousin told me that preclosure usually saves a good amount of EMIs and interest rates. However, you should check the prepayment charges and read all terms and conditions of the bank to avoid any confusion. He also told me that there are two types of prepayment and whether you can or cannot preclose the loan before a year is usually mentioned in the loan agreement. 

1. Full Prepayment: I learned that usually personal loans have a lock-in period of 6-12 months before which you cannot preclose. So, he advised me to check the agreement once.

2. Partial Prepayment: In this case, you’re supposed to pay more than your monthly EMIs. This eventually reduces your outstanding balance and interest rates.

He also told me that the right time to preclose a loan may depend on specific circumstances. 

1. If you have an excellent credit history, you can preclose your loan without much trouble and it can also indicate your commitment to repaying loan on time, which can improve your eligibility score for future personal loans.

2. If you want to preclose your loan before 1 year, confirm once with your bank and check your loan agreement. If it’s positive, you should create a cost-benefit analysis as well, to find out if the preclosure will benefit you in the long run.

I hope this gives you some idea. 

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How to Close Personal Loan Early?