Foreclosing a personal loan offline: Easy steps to close your loan at the branch

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Start by verifying eligibility and the real cost

Before you approach a branch, open your sanction letter and check if there is any lock-in period (usually 6-12 months) and the real foreclosure charge. Most personal loans are fixed-rate and typically levy a 2–5% fee on the outstanding principal plus GST. If your loan happens to be on a floating rate and you’re an individual borrower, lenders generally cannot levy a foreclosure penalty under RBI directions, but this rarely applies to personal loans. Also look for any pending late fees, cheque-bounce charges or statement fees that will be added to your final payoff. Knowing these numbers in advance helps you decide whether it saves enough interest to close now.

Collect the documents the branch will ask

Carry your govt. ID, PAN, loan account number, original sanction letter, and your last repayment statement. Carry your cheque book or be ready to make an RTGS/NEFT/IMPS from your banking app at the counter. If your EMIs are deducted via NACH/ECS, note the mandate ID; you’ll need it cancelled after payoff. If someone else will visit on your behalf, prepare an authority letter, their ID, and copies of your IDs—many lenders accept this for in-person requests.

Request a dated foreclosure statement at the home branch

Walk into the loan’s home branch (or the lender’s servicing branch) and ask for a foreclosure or pre-closure statement “as on” a specific date—ideally the same day you’ll pay. This should clearly show principal outstanding, per-day interest up to the payoff date, foreclosure charges with GST, and any incidental fees. Ask employees to hold the quote for the day and mail the breakup on letterhead or official mail. Make sure the interest has been calculated till the payoff date and not any future EMI by mistake.

Choose the right mode of payment and pay the dues

It is not legally possible to accept big loan repayments in cash; make payments by RTGS/NEFT/IMPS, an account-payee cheque, or a banker's draft. Check the beneficiary name and account and include your loan number in the remarks while making a transfer. If paying by cheque/draft, ask when funds would be "realised"—your closure date hinges upon this. Once payment is made, get a formal receipt mentioning the loan number, amount realised, date, and staff stamp/signature.

Cease auto-payments and halt future EMIs

Mail a signed request for cancellation of the NACH/ECS mandate and pending instructions in writing. Refer to the mandate ID in the request and keep a copy acknowledged. Also remove the autopay instruction from your net-banking or card autopay list so an orphaned EMI isn't invoked on closure. If an EMI is debited post-payoff, submit a refund request with the branch on the same day, along with your closure receipt.

Collect your No-Objection Certificate (NOC) and documents

Obtain an interim NOC on letterhead during payment, and the final NOC in 3–7 working days (tilda is lender-dependent). The NOC should specify the loan paid and closed in full with no

amount remaining, mention your name, loan number, and date of closure, and have an authorised signature and seal. If you'd deposited security cheques, have them returned or receive a written assurance that they've been shredded. Keep the NOC and receipt in a safe place—you'll need them if there is any future dispute.

Make sure your credit report reads 'closed', not 'settled'

Lenders typically report closure to bureaus within 30 days of settlement. Remember to download your CIBIL/Experian/Equifax/CRIF report 30–45 days after closure and ensure that the account status shows "Closed" with a zero balance and the correct closure date. If something shows as "Settled" or "Written-off" by mistake, dispute it with the bureau and include your NOC and payment receipt; also send the lender's grievance desk to trigger a corrected update.

Understand the impact on interest, cash flow and score

Early prepayment of a personal loan can benefit interest cost savings and free up monthly cash flow, but the prepayment fee takes a small bite out of savings—compute it on your statement's amortization. Your credit score can dip a bit because you have less credit history and altered credit mix; this will generally settle down in a few months if you keep card usage rates under 30% and pay off all other charges on time. If you plan to take out a big loan in the near term (like a house loan), closing costly unsecured loans will strengthen your argument.

Typical timeline and how to stay from getting irritated

From branch visit to final NOC, take anywhere from same day to 10 working days, depending on your payment channel and lender processes. Go early before cut-off times so RTGS is available on the same-day. Always pay your next EMI cycle—if within three business days of due date, pay the EMI and foreclose soon after to avoid double interest adjustments. Keep every interaction recorded through email as well as stamped receipt at the branch to enable prompt follow-ups.

FAQs

Can a lender deny foreclosure during a lock-in period?

Yes. If your loan contract does come with a lock-in (such as the initial 6–12 months), the lender can insist on you waiting or charging the applicable early-closure fee. The lender will drop or reduce this if you're refinancing with them or making a larger part-prepayment—ask in the branch and get any waiver in writing.

How is the level of foreclosure actually set?

It's your principal outstanding plus interest accrued up to the date of payoff, plus foreclosure/prepayment charges, GST on charges, and any unpaid penalties or charges. Use the dated foreclosure statement as your single source of truth, and settle on the same date in an effort not to pay extra per-day interest.

Suppose I can't visit the branch myself?

Most lenders permit a representative to act on your behalf through a signed authority letter, duplicates of your ID and theirs, and sometimes video verification. Some also permit a courier request followed by the same-day RTGS. Ring the branch beforehand to check their offline documentation requirements so your representative brings all that is required.