How the foreclosure amount is calculated
We rebuild your original loan schedule and read off the outstanding principal after the EMIs you have paid. The foreclosure amount is:
Outstanding principal + foreclosure charge + 18% GST on the charge
The interest saved is every rupee of interest left in the remaining EMIs. Net savings subtract the charge and GST.
Worked example
A ₹5 lakh personal loan at 12% for 5 years, closed after 24 EMIs, with a 4% foreclosure charge:
| EMI | ₹11,122 |
| Outstanding principal | ₹3,34,868 |
| Foreclosure charge (4%) | ₹13,395 |
| GST on charge (18%) | ₹2,411 |
| Total to pay | ₹3,50,674 |
| Interest saved | ₹65,542 |
| Net savings | ₹49,736 |
Assumptions
- Your rate has been constant since the start of the loan. If it has changed, use your latest outstanding from your statement and the part-payment calculator.
- The foreclosure happens right after an EMI. In practice lenders add interest for the days since your last EMI.
- The charge is a percentage of the outstanding principal.
Frequently asked questions
What is loan foreclosure?
Foreclosure (also called pre-closure) means repaying the entire outstanding loan in one go before the tenure ends. You pay the outstanding principal, interest for the days since your last EMI, and any foreclosure charge.
How do I calculate the pre-closure amount of a personal loan?
Pre-closure amount = outstanding principal after your last EMI + interest for the days since that EMI + the foreclosure charge + 18% GST on the charge. Enter your loan amount, rate, tenure and the number of EMIs paid above to get the outstanding principal and charges. For the exact figure on a given date, ask your lender for a foreclosure statement.
Can I foreclose a personal loan at any time?
Usually only after a minimum number of EMIs: many lenders don't allow foreclosure in the first 6 to 12 months. Your loan agreement or Key Facts Statement gives the lock-in period and the charge. Floating-rate personal loans to individuals can be closed without any charge.
Are there foreclosure charges on home loans?
Not on floating-rate loans taken by individuals for non-business purposes. RBI does not allow lenders to levy foreclosure or prepayment penalties on them. Fixed-rate loans may carry a charge. For floating-rate business loans to individuals and small businesses sanctioned or renewed from 1 January 2026, banks and larger NBFCs can't charge either (some smaller lenders still may on loans above ₹50 lakh).
What are typical personal loan foreclosure charges?
Many banks and NBFCs charge 2% to 5% of the outstanding principal, plus 18% GST, and some do not allow foreclosure in the first 6 to 12 months. Some lenders waive charges after a set number of EMIs. Check your loan agreement or Key Facts Statement.
What documents should I collect after foreclosure?
Get a No Objection Certificate (NOC) or closure letter, all original property documents for a home loan, and make sure the lender removes any lien. For a car loan, get the hypothecation removed from the RC. Check your credit report a month or two later shows the loan as closed.
Is it better to foreclose or keep investing?
Closing a loan gives a guaranteed return equal to its interest rate. If the rate is high (like most personal loans), foreclosing is usually the better use of spare money. For low-rate home loans, compare with what your money could earn using the prepay vs invest calculator.