If you have a loan, you must pay an EMI (Equated Monthly Instalment) on it. But if the person who took out the loan could come up with a lump sum, he or she might choose to pay off the whole loan at once before the actual due date and be free of debt.
Then, loan foreclosure is when the entire loan balance is paid back in one payment before the end of the EMI period. To foreclose on a loan, the borrower must first decide how many EMIs he or she wants to pay and then choose which month to close the loan. With this article, you can know better how much it will cost to foreclose on a debt.
With the help of an online calculator, you can figure out how much it will cost to foreclose on a personal loan. When checking the exact fees for foreclosure on a personal loan, many factors are taken into account, such as the total loan amount, the length of time it takes to pay off the loan, the interest rate, the monthly EMIs, and the foreclosure month. Personal Loan Foreclosure also lets you figure out how much money you’ll save on interest.
What is a Foreclosure Calculator for a Personal Loan?
You can use a calculator that has been made expressly to check how much interest you will save and how much you will repay on your loan if you allow it to go into foreclosure. This type of calculator can be used online. Due to this, a prepayment calculator can aid you in checking how the duration of your loan, the amount of your EMI, and other elements will change as a direct result of your decision to pay off the debt sooner rather than later.
The foreclosure calculator: how to use it.
Calculating the amount of the foreclosure loan with the help of a foreclosure calculator is an easy process that makes easy the calculation of the balance of the loan amount in addition to the interest payment. This is done by calculating the instalments of the loan. A foreclosure calculator uses the following information to perform the calculations vital for the prepayment:
- The total amount that was borrowed as well as the balance on the loan at this time
- The schedule for repaying the loan is as follows:
- The rate of interest charged for borrowing
- The entire amount of money that has been paid off in EMIs.
- The month of filing for bankruptcy
- All that is linked with the bank taking back the loan, including the costs and fees.
What is Foreclosure Month?
After the date of the agreement, this is the month in which you will need to repay the whole amount of the loan. If the term of your loan is 7 years and you decide to repay it after 1 year and 2 months, then the month you decide to repay is your foreclosure month.
Estimating foreclosures in an easy way
How exactly do you calculate the amount of a loan you can foreclose on? Helpful calculators include those that help with mortgage prepayment and foreclosure aid. You can get the answers you need whenever you want with Piramal as their charges are always the same. The balance on the loan and the interest that must be paid can easily be known by using the data in this formula.
- Potential loan amount
- The length of the loan
- Rate of interest at which the loan was taken
- The total number of paid EMIs
- The month of foreclosure
- Costs to be paid by taking back a loan
Are there Penalty charges associated with the foreclosure of a loan?
When you decide to repay the loan all at once, you will be liable for paying a percentage of the loan amount as foreclosure charges. This fee is also known as a prepayment penalty. The fees to be paid with foreclosure might vary from bank to bank, but they often range from 2% to 5%, in addition to any taxes.
The lender levies this penalty to make up for the interest revenue they would no longer get as a result of the loan being paid off early. Before you settle on the choice to foreclose on your loan, it is vital for you to first know the amount of the prepayment penalty and conduct an in-depth analysis of your current financial condition. This will allow you to reduce the money you need to pay.
When a home loan with a floating interest rate is paid off early, Piramal Capital and Housing Finance don’t impose any charges(s).
Your Piramal Loan: How to Foreclose?
This is a detailed guide on foreclosing on or prepaying your Piramal house loan.
- First, tell Piramal Consumer House Finance (PCHF) or your relationship manager that you want to pay off your Piramal loan early. PCHF will make all the changes to your loan term and payment plan based on your decision.
- Second, make a list of the ID proofs (Aadhaar card, PAN card, etc.) you will need to submit with your loan application.
- Then, your relationship manager at PCHF will figure out how much you owe after you have filed for foreclosure and added interest and any other fees (if any)
- Now, you can pay the invoiced amount by sending a check or a Demand Draft.
- Fifth, once the money has been paid, PCHF will send a letter of thanks, a “No Due”, and a “No Objection” certificate.
The Bottom Line
A large part of interest and EMIs that would have been paid over the life of a loan can be avoided when the loan is paid off early. But some small fees are to be paid with prepayment, so it’s smart to check the fine print before committing to a closure.