How to Foreclose HDFC Personal Loan in 1 Minute

how to foreclose hdfc personal loan

Introduction to Foreclose or Close HDFC Personal LoanForeclosing an HDFC personal loan is a significant financial decision that requires careful consideration of various options and implications. This comprehensive guide will delve into the step-by-step process of closing an HDFC personal loan, highlighting the available options, associated charges, and benefits. By exploring all facets of loan foreclosure, borrowers can make informed decisions tailored to their financial circumstances.

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Table of Content

Overview of Foreclose HDFC Personal Loan

AspectDetails
Prepayment OptionsFull prepayment is allowed after repayment of 12 EMIs (salaried).
Part payment allowed up to 25% of the Principal Outstanding.
Part payment is allowed once in a financial year and twice during the loan tenure.
Pre-payment ChargesFor prepayment between 13-24 months: 4% of outstanding principal.
To prepayment after 36 months: 2% of outstanding principal.
For prepayment between 25-36 months: 3% of outstanding principal.
Note: Rates as of 29th November 2023.
Documentation Required– Personal Loan account number
– Identity proof (Aadhar card, passport, PAN, or driving license)
– Loan-related documents (loan approval letter, loan account statements)
– Pre-closure letter stating outstanding amount, penalties, and other applicable charges
– Cheque/draft favoring HDFC Bank for the pre-closure amount
Foreclosure Process1. Visit the HDFC Bank branch with all necessary documents.
2. Place a request for pre-closure through a written request or a relevant form.
3. Pay the pre-closure amount using a cheque or draft favoring HDFC Bank.
4. Execute any necessary documents, if required.
5. Obtain an acknowledgment for the pre-closure amount paid.
6. The Loan closes automatically upon receipt of the outstanding amount.
7. HDFC Bank dispatches a No Objection Certificate (NOC) to the borrower’s mailing address.
Online Foreclosure (Limited Option)– Login to MyCards at https://mycards.hdfcbank.com.
– In the linked EMI section, select the loan and click the loan pre-closure button.
Benefits of Foreclosure– Increased EMI affordability.
– Reduced share of unsecured loans in the credit mix.
– Savings on the cost of interest.
Disadvantages of Foreclosure– Negative impact on liquidity.
– Preclosure charges of up to 2-4% on the outstanding loan amount.

Understanding HDFC Personal Loan Foreclosure

1. Prepayment Options

Foreclosing an HDFC personal loan involves prepayment, which can be done in part or in full. Borrowers can choose to repay the outstanding amount before the loan tenure ends, providing flexibility and potential cost savings.

1.1 Nil Prepayment Charges Until 12 EMIs

HDFC Bank allows salaried individuals to prepay their personal loans without incurring any charges until the repayment of 12 EMIs. This feature offers a grace period for borrowers to assess their financial situation and decide on early repayment.

2. Part-payment Options

Part-payment options allow borrowers to make partial repayments of up to 25% of the principal outstanding. This option is available once in a financial year and twice during the entire loan tenure, providing flexibility for borrowers with fluctuating financial capabilities.

3. Pre-payment Charges

Understanding the pre-payment charges is crucial for borrowers considering early closure. The charges vary based on the tenure of the loan:

Loan TenurePre-payment Charges
13-24 months4% of outstanding
25-36 months3% of outstanding
After 36 months2% of outstanding

These charges are vital factors to be considered when evaluating the cost-effectiveness of foreclosure.

How to Foreclose HDFC Personal Loan

1. Gather Necessary Documents

Before initiating the foreclosure process, ensure you have the required documents:

  • Personal Loan account number
  • Identity proof (Aadhar card, passport, PAN, or driving license)
  • Loan-related documents (loan approval letter, loan account statements)
  • Pre-closure letter stating outstanding amount, penalties, and other applicable charges
  • Cheque/draft favoring HDFC Bank for the pre-closure amount

2. Visit the HDFC Bank Branch

Borrowers must visit the HDFC Bank branch with the complete set of documents. The branch visit is essential for initiating the foreclosure process. During the visit:

  • Place a request for pre-closure through a written request or a relevant form.
  • Pay the pre-closure amount using a cheque or draft favoring HDFC Bank.
  • Execute any necessary documents, if required.

3. Acknowledgment and Loan Closure

Upon payment of the pre-closure amount, obtain an acknowledgment from the bank. The loan will close automatically once the applicable funds are received by the bank. HDFC Bank will dispatch a No Objection Certificate (NOC) to the borrower’s mailing address, marking the official closure of the personal loan.

4. Online Foreclosure (Limited Option)

While HDFC Bank primarily requires borrowers to visit the branch for loan closure, there are limited online options for initiating premature closure. To explore this option:

Benefits of HDFC Personal Loan Foreclosure

1. Increased EMI Affordability

Foreclosing a personal loan increases EMI affordability, enhancing eligibility for new loans. Banks often consider the total EMI within 50-60% of the total monthly income, and reducing existing EMIs can boost eligibility for additional financial assistance.

2. Savings on Cost of Interest

Borrowers can significantly save on interest costs by prepaying the loan amount. Early closure reduces the total interest paid over the loan tenure, resulting in substantial savings.

3. Reduced Share of Unsecured Loans

Personal loans from HDFC Bank are unsecured, and prepaying the loan reduces the proportion of unsecured loans in the credit mix. This positively impacts credit scores, increasing the likelihood of approval for other secured loans.

Disadvantages of HDFC Personal Loan Foreclosure

1. Negative Impact on Liquidity

Using existing investments for loan prepayment can negatively impact liquidity. Borrowers must carefully evaluate the effect on emergency funds, which may be crucial for unexpected financial challenges.

2. Preclosure Charges

HDFC Bank imposes prepayment charges ranging from 2-4% of the outstanding loan amount, depending on the tenure. Borrowers need to consider these charges when deciding to foreclose the loan.

Conclusion to How to Foreclose HDFC Personal Loan

Foreclosing an HDFC personal loan involves careful consideration of various factors, including prepayment options, associated charges, and potential benefits. Understanding the process and evaluating the impact on financial stability is crucial for making an informed decision. By exploring all available options, borrowers can navigate the foreclosure process effectively, improving their financial flexibility and overall creditworthiness.

FAQs for How to Foreclose HDFC Personal Loan

Is full prepayment allowed for HDFC Personal Loans, and when can I initiate it?

Full prepayment is permitted for HDFC Personal Loans after the repayment of 12 EMIs. This provides borrowers with a grace period before they can opt for complete closure.

Can HDFC Personal Loan Foreclosure be done online?

While the primary method is through a branch visit, limited online options are available. Borrowers can use the MyCards platform to access linked EMI sections and initiate the loan pre-closure process online.

What benefits can I expect from foreclosing my HDFC Personal Loan?

Foreclosing an HDFC Personal Loan offers several advantages, including increased EMI affordability, significant savings on interest costs, and a reduced share of unsecured loans in the credit mix. These benefits contribute to improved financial flexibility and creditworthiness.

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