An outstanding business loan calls for a monthly EMI. In case a business owner has generated extra revenues, he can choose foreclosure of loan. Foreclosure loan means repaying the entire loan amount and foreclosing the account before its tenure. To foreclose the business loan account, you can follow the following detailed procedure:
First, write an application to the loan lender (NBFC or bank) for the foreclosure of the loan. In the application, mention your existing business loan account number and enclose a copy of PAN and address proof. You can also choose to apply for foreclosure online on the lender’s website or send them an email.
Once the lender receives an application, the lender will calculate the outstanding amount on your loan account. He will also take into account the interest paid so far and the foreclosure date to calculate pending interest. The outstanding amount shall be communicated with you over a call or an e-mail. This amount needs to be paid by way of online transfer or cheque/DD.
Lenders generally levy some penalty on the foreclosure of the loan. These charges are typically levied on the fixed rate. The penalty will be added while making the foreclosure payment. Also, some lenders such as ZipLoan do not charge any prepayment penalty after the payment of 6th EMI.
On the receipt of the outstanding dues, the lender will complete the foreclosure formalities. The EMI instructions will be stopped. Any original document, if you have submitted, will be returned to you within 10-15 working days. Along with papers, you will also receive a no-due certificate from the lender stating that no amount is due from your side. This certificate will also include your name and address.
- You need to refer the document checklist to ensure that you have received all the documents, and they are in good condition.
- You can also inform the credit rating agencies about the foreclosure so that they can update it in their records.