Money View Personal Loan Foreclosure & Repayment Procedure
Easy accessibility to personal loan schemes has made it relatively easier for people to access funds when they need. With Money View offering a tenure of up to 5 years, it gets a bit tempting for aspiring borrowers to go for a long-term personal loan. For loan tenure of 5 years, the EMIs are low, which helps reduce the financial burden quite a bit. However, longer tenure may result in a higher amount of interest and so some of the borrowers opt for paying off the loan amount after paying a few EMIs. This process is called foreclosure of a personal loan.
Money View Personal Loan Foreclosure
If you have taken a personal loan from Money View, you could foreclose or pay off the loan amount anytime without penalty based on the tenure of your loan. The terms and conditions for foreclosure of personal loans are given below.
- For personal loans with tenure up to 6 months - Foreclosure not allowed.
- For personal loans with tenure from 7-18 months - Foreclosure allowed only after making 6 EMI payments.
- For personal loans with tenure more than 18 months - Foreclosure allowed only after making 12 EMI payments.
Repayment of Money View personal loan before the end of the tenure can be done on the Money View app itself. The “Foreclose Loan” section will be visible on the app if the tenure of your loan is more than 6 months and when you have paid the mandatory number of EMIs to foreclose the loan as mentioned above. Also, please note that personal loan foreclosures are allowed only after the 8th of every month.
Loan Prepayment in a Nutshell
Loan foreclosure or complete prepayment (not to be confused with part-payment) is basically when you repay your loan before the tenure ends. This helps you get rid of the additional interest amount that you were supposed to pay throughout the loan period. In order to do so, you have to inform your lender or the bank.
You can also make part payments against your loan to reduce the principal outstanding. This will also bring down your EMI and loan tenure considerably. However, some banks don’t allow you to prepay. So, check with your lender to know whether you can partially pay off your personal loan. So, is it okay to put a lump sum to clear your personal loan? Let’s look into the pros and cons of personal loan repayment.
Loan foreclosure: What May Work for You
Here are some of the benefits of personal loan foreclosure:
- Reduces Financial Burden
Once you clear the loan, there’s no need to worry about the EMI, the interest, or rather anything related to your loan. Even if you make part-payments, it will help you save more on the interest. The longer the loan tenure is, the more you will be paying as interest. So partially paying or foreclosing your loan will help you save a lot of money.
- No Prepayment Charges on Floating Rate Loans
Reserve Bank of India has strictly asked banks not to charge any foreclosure penalties against early repayment of floating rate loans. This means that you won’t incur additional costs in case you decide to prepay the entire personal loan amount. However, some banks do levy part-payment penalties. It’s advised to check with your lender to know more about such charges.
- Mitigates Collateral-Related Risks
Once you repay the loan, you are not liable to pay anything more to the lender. This automatically nullifies the risk of defaulting and frees your collateral (which could be your property) in the process.
Loan foreclosure: What May Not Work for You
- The financial Stress Involved
Prepaying such a lump sum amount may get a bit overwhelming at times. It can be a problem during financially demanding situations. Hence, it’s always advised that before repaying, it’s best to check whether you have enough funds in your account to deal with emergency situations.
- Missing Out on Investment Opportunities
Let us imagine that you are planning to prepay your loan and you have enough balance in your account to foreclose the loan. But did you consider investing this amount in channels that will give you more returns? You may go with the latter option if you deem it necessary. Plan properly so that you don’t have to deal with the dilemma.
- Additional Costs Involved
Though RBI has asked banks not to levy penalty charges on floating rate loan prepayments, there are still some lenders who impose penalties. If your lender is one of them, you may have to incur additional costs, which can get a bit heavy on your pocket depending on the outstanding or unsettled amount.
Checklist for Loan Foreclosure
Here’s what you need to ensure while foreclosing your loan:
- Make sure that you are submitting all the relevant documents; any invalid document may lead to rejection of your application.
- Always calculate how much you will be saving by repaying the existing amount.
- Check whether investing the amount is a better option than repaying. Make your decision based on that.
It’s best to take your time and contemplate whether you are ready to repay the loan. Also, consider if repaying the outstanding amount hurts your finances. To be precise, consider multiple factors before foreclosing your loan. Not taking an impulsive or hasty decision is the mantra here.
Personal Loan Foreclosure and Credit Score
Your credit score will get affected if you pay the remaining loan amount at once after just you pay off the first few EMIs. Most lenders including Money View do not allow foreclosure of loans before a particular period of time. If you have taken a loan for 1 year, foreclosure after 1 month or 1 installment is most often not permitted. Usually, you have to complete a minimum of 6 months or 12 months EMI payments before you have the option to foreclose the loan.
Once you have paid the minimum number of EMIs required, you can request a foreclosure of your loan account to your bank. The procedure of foreclosure will require you to pay a certain amount of money as prepayment fees to the bank in order to foreclose the loan as the bank loses a large sum of money it would have received as interest.
How Does This Affect Your Credit Score?
One of the key factors affecting your credit score is the age of your loan and credit card accounts. When the loans and credit cards are active for a long time, the lenders can judge if you are able to pay the loan EMIs or credit card bill payments every month without fail. When you pay the EMIs without fail every month for a long period of time, it increases your overall creditworthiness. Hence, it also improves your credit score as the credit bureaus think that you are a reliable borrower. If you pay off the loan only after paying a few EMIs, the average age of your total active loan and credit card accounts decreases. It may negatively impact your credit score in the process.
It is advisable that you do not pay only the first few installments and then pay the whole amount. It is better if you pay the EMI per month for at least 12 months and then pays the remaining amount as a whole. In that case, your timely payments per month will help boost your credit score
If you have any other questions regarding loan foreclosures, please contact us at: Phone: 080 4569 2002 || Email: firstname.lastname@example.org