Foreclosure And Partial Payment Of A Personal Loan: Know How They Work
July 17, 2023

Personal Loan

Research says In India, 67% of people have taken a Personal Loan at some stage to meet their financial needs. A Personal Loan can fulfil immediate needs by providing timely financial assistance, helping individuals satisfy their requirements without relying solely on their close circle.

Like many others, Satish took a Personal Loan to meet his financial needs. He first checked his Personal Loan Eligibility, applied for the loan and got the loan instantly, and used the money for what he needed. Every month, he started paying back the loan through fixed payments called EMIs.

But after a few months, he unexpectedly received a large sum of money from his family’s property division. Now he wants to know how he can use the funds to make a complete or partial payment of his loan that money to repay or even finish paying off the loan. Unaware of the procedures, he contacted Your Loan Advisors, Personal Loan Consultants in New Delhi.

After checking his details, our consultant gave him the good news: “Hey, Satish! You have two choices for loan repayment. You can pay partial to cover a portion of your loan or opt for foreclosure to pay off the loan completely.” Satish asked eagerly, “But how?”

If you have the same question, keep reading to learn about these two ways of repaying a Personal Loan when you have a large amount of money. Let’s get started!

Part Payment Of a Personal Loan: Features and Benefits

When you have some extra money but not enough to pay off your entire loan, you can make a partial payment. It involves depositing that amount into your loan account, which reduces the remaining balance of the principal loan amount.

As a result, your monthly instalments (EMIs) decrease, and you pay less interest overall.

It is important to remember that part payment is most effective when you contribute a significant lump sum of money. By reducing the principal amount, part-payment lowers the total obligation. Though the personal loan interest rate and your EMI amount remain the same, the number of instalments reduces. Whenever you have surplus funds, consider making part-payments on your loan.

Terms and Conditions: Apply to a partial payment differ as per the individual lender’s policy. Leading Banks permit a part payment as per the following

  • A loan holder can prepay a part of the loan after repaying 12 EMI or more.
  • Part payment is allowed up to three times in a calendar year
  • Payment of 25% of the loan amount issued can is permitted as a partial payment.
  • Charges of 3% onwards are applicable on the amount repaid.

Process For The Partial Payment of a Personal Loan

Personal Loan part payment is made by transferring the amount electronically or via a banker’s instrument to the Loan account number, with specific instructions for adjustment towards the Loan Principal.

Follow up with instructions to the Bank for rescheduling the loan. It is important to note that even after making a part payment, you must continue repaying the remaining EMIs as per the schedule shared by the Bank.

Note The Following Before a Partial Repayment

Here are some essential points to consider when making a partial payment.

  • Check For Part Payment Charges: Some loan agreements may have prepayment charges or fees associated with a partial payment. Ensure you understand these charges before proceeding with the repayment.
  • Assess The Impact on Interest: Making a partial payment reduces the outstanding principal amount. So, evaluate the potential interest savings before making a partial payment.
  • Verify The Calculation: Double-check the math of the revised EMI or loan tenure after making the partial payment to ensure accuracy.
  • Consider Credit Score Impact: With part payment, you can close the debts as quickly as possible. So, you could see your credit score rise.

Foreclosure Of a Personal Loan: The Complete Procedure

Personal Loan Foreclosure means repaying the remaining loan amount in one lump sum instead of multiple EMIs. You can choose foreclosure if you have extra funds and want to repay your ongoing Personal Loan.

A lock-in period is an essential aspect of Personal Loan Foreclosures. It is a duration during which borrowers cannot fully or partially prepay their loans. The lock-in period can range from six months to a year or more. You must complete this period before settling the loan account and repaying the outstanding amount in full.

There are charges associated with Personal Loan Foreclosure. Lenders impose these charges to compensate for the interest lost due to early repayment. The fees typically range from 3% to 7% of the outstanding principal loan amount and applicable taxes. Consider these charges before deciding on loan foreclosure to understand the impact on your financial situation.

Benefits of Foreclosing Your Loan

  • Relief from future repayments, improving your debt-to-income ratio.
  • Savings on interest and overall loan cost.

Impact On Credit Score

Closing a loan earlier than expected can positively impact your credit score. It demonstrates that you are responsible with your repayments, which can improve your overall creditworthiness.

What is The Foreclosure Process For a Personal Loan?

Follow these steps to Foreclose your Loan before completing the tenure:

  • Reach out to the Lending institution to check the specifications for a foreclosure.
  • Contact the customer care of the Bank and put forth a request to prepay your loan.
  • Get a statement of your Loan account to ascertain the principal balance of your loan.
  • Visit the concerned Branch of the Bank for the pre-closure. (Banks delegate specific branches to oversee this process)
  • Carry a Copy of your KYC Documents with your cheque book.
  • The personal loan officer will calculate the outstanding amount, including any penalty fees (if applicable).
  • Once you make the payment, the financial institution will process your request.


An Instant Personal Loan to fulfil immediate needs is a good option, and it is prudent to check the terms for repayment when acquiring the loan knowledge of the rules for partial payment and foreclosure will help to make informed decisions.

Satish was happy to receive all the necessary information. We provided him with a clear understanding of the procedure and the additional charges he needs to consider, to help him decide.

Experience similar satisfaction as Satish by receiving the proper support and guidance. If you have any doubts or concerns regarding the partial payment Process or Foreclosure of a Personal Loan, don’t hesitate to get in touch with the team at Your Loan Advisors today!

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