Personal Loan Prepayment — Should You Close Your Loan Early?
CardKhoj Editorial Team 9 min read16 March 2026
Financial Disclaimer
Disclaimer: This information is for educational purposes only. Always consult a certified financial advisor before making any financial decision.
Should You Close Your Personal Loan Early?
Personal loans charge 10-24% interest, making prepayment potentially very rewarding. But banks charge 2-5% foreclosure fees. The math depends on your remaining tenure and outstanding amount.
Prepayment Savings Calculator
| Outstanding | Rate | Remaining Tenure | Foreclosure Fee | Net Saving |
|---|---|---|---|---|
| ₹3L | 14% | 24 months | ₹12,000 (4%) | ₹34,800 |
| ₹5L | 12% | 36 months | ₹15,000 (3%) | ₹82,500 |
| ₹8L | 16% | 48 months | ₹24,000 (3%) | ₹2,40,000 |
When to Prepay
✅ Prepay if remaining tenure > 12 months AND net saving > foreclosure fee. ✅ Part-prepay to reduce EMI or tenure without full closure. ❌ Don't prepay if you'd need to break FD or borrow to do it. ❌ Some NBFCs have zero foreclosure fee after 12 EMIs — check your agreement.