Loan closure planner
Enter the loan as it stands today. The plan shows what you'd owe at closure, including the fee, and whether your savings and lump sums cover it.
Lump sums you expect
Month 1 is the month of your next EMI. A lump sum counts from the month you enter.
The total leaves out interest for the few days between your last EMI and the closure date, usually a small amount. HDFC's current personal loan slabs are 4% of principal outstanding up to 24 EMIs, 3% for 25 to 36, and 2% after, plus GST. Enter your lender's rate if it differs.
About this calculator
What it costs to close a loan early
Closing a loan early means paying off the principal still outstanding in one go. You stop paying all the future interest, which is the saving, but most lenders charge a foreclosure fee on the amount you settle.
On personal loans the fee is typically 2% to 4% of the principal outstanding plus GST, and the percentage usually falls the further you are into the tenure. Many lenders also only allow foreclosure after you have paid a minimum number of EMIs, commonly 12. The exact slab is in your loan agreement, so check it there rather than relying on a general figure.
When closing early is worth it
The test is simple: compare the interest you would still pay against the foreclosure fee. If the remaining interest is comfortably larger, closing saves money. Early in a loan that is almost always true, because so much of each EMI is still interest. Very near the end it often is not, since little interest is left to save.
The other side is liquidity. Emptying your savings to close a loan leaves you with no cushion, and a fresh loan later will cost more than the one you just cleared. Many people keep three to six months of expenses aside and close with what is left over, so an emergency does not force a fresh loan.
Home loans are treated differently
The RBI does not permit banks and NBFCs to charge foreclosure or prepayment penalties on floating-rate loans taken by individual borrowers for purposes other than business. So a normal floating-rate home loan can usually be prepaid or closed at no charge. Fixed-rate home loans and business loans can still carry a fee.
Common questions
How much is the foreclosure charge on a personal loan?
Commonly 2% to 4% of the principal outstanding plus GST, with the percentage dropping as you move through the tenure. Lenders usually allow foreclosure only after a minimum number of EMIs. Your loan agreement has the exact slab.
Is there a penalty for prepaying a home loan?
Not for a floating-rate home loan taken by an individual for a non-business purpose, where the RBI does not permit foreclosure charges. Fixed-rate home loans may still carry one.
Should I close the loan or invest the money instead?
Compare the loan's interest rate with what your investment earns after tax. A loan at 11% is a guaranteed 11% saving; a fixed deposit at 7% taxed at your slab nets far less. Where the loan rate is higher, closing saves more than the investment earns. The loan vs invest calculator puts the two side by side.
What is the difference between part-payment and foreclosure?
Part-payment reduces the outstanding principal while the loan continues. Foreclosure clears it completely and ends the loan. Lenders often cap part-payments at a share of the outstanding amount and limit how often you can make them.
What should I collect after closing the loan?
Ask for the No Objection Certificate and the closure statement, make sure the lender reports the account as closed to the credit bureaus, and collect any original documents or post-dated cheques you had given.