Personal Loan Foreclosure Calculator

How to use this calculator

You need four numbers, all of which are in papers you already have:

• Loan amount: the amount sanctioned, from the sanction letter or loan agreement. Use the sanctioned amount, not the amount that reached your bank account after the processing fee was deducted.
• Interest rate and tenure: the yearly rate and the original number of months, from the Key Facts Statement (KFS) or the welcome letter. Most personal loans are fixed-rate, so this rate has not changed.
• EMIs paid: count the EMIs already debited, from your loan statement or the lender's app.
• Foreclosure charge: the percentage in the schedule of charges in your KFS. Leave GST switched on; it is always added to the charge.

The result shows the outstanding principal, the charge with GST, the amount to pay, the interest you would still pay if you let the loan run, and the net saving. The amount on your lender's foreclosure letter will be a little higher because it adds interest for the days since the last EMI.

Worked example: when does foreclosing pay off most?

A ₹5 lakh personal loan at 12% for 5 years, with a 4% foreclosure charge plus GST:

Closing after 1 year saves about ₹91,581 after charges. Waiting until 48 EMIs are paid leaves only ₹2,378 to save, because by then most of the interest has already been paid. In an EMI loan, the early instalments are mostly interest and the later ones are mostly principal.

The last column is the charge (before GST) at which closing would save nothing. After 48 EMIs it is about 5.6%, close to the 4% the lender asks. Late in a loan, a 5% charge or a waiting period can wipe out the benefit, so check the net figure before you pay.

Second example: how much the charge matters

A ₹3 lakh loan at 14% for 3 years, closed after 18 EMIs. The outstanding principal is ₹1,65,608 whatever the charge:

Going from no charge to 5% cuts the saving roughly in half. If your lender reduces the charge after a set number of EMIs, it can pay to wait for that date, as long as the next EMI or two cost less than the charge you avoid.

What the rules say about closing a personal loan early

• Fixed-rate loans can carry a charge. Most personal loans in India are fixed-rate, and lenders may levy a foreclosure charge, typically 2% to 5% of the outstanding principal, sometimes in slabs that fall with time.
• Floating-rate loans to individuals carry none. RBI does not allow a foreclosure charge on floating-rate loans to individuals for non-business purposes. A few lenders offer floating-rate personal loans; check which kind yours is.
• GST at 18% is added to the foreclosure charge, as it is to the processing fee.
• The KFS binds the lender. Charges not listed in your Key Facts Statement cannot be collected without your consent, so keep it with your loan papers.

Common mistakes when closing a personal loan

• Emptying the emergency fund. Keep three to six months of expenses aside. A new personal loan taken in a hurry later will cost more than the interest you saved.
• Closing with a credit card or another loan. Moving debt to a costlier product only adds charges.
• Paying from an old quote. The foreclosure letter is valid for a short window. Pay within it, by NEFT or at the branch, and keep the receipt.
• Forgetting the auto-debit. Ask the lender to cancel the NACH mandate so no EMI is debited after closure, and claim a refund at once if one is.
• Accepting "settlement". If you are paying in full, the status must be "Closed". Get a No Dues Certificate and check your credit report a month or two later.

Assumptions and related tools

• The rate hasn't changed since the loan started, and EMIs were paid on time.
• The charge is a percentage of the outstanding principal. Interest for the broken period is not included.
• For home and other loans, use the loan foreclosure calculator. If you can only pay part of the loan, use the part-payment calculator. To see what your loan really cost with fees, read the true cost of a personal loan.

Frequently asked questions