You are pretty aware of this fact that a personal loan is a long term liability on your head. You have taken several steps to make your loan term convenient and hassle free. But, if you are planning to pay off your debt, then, the one best option of prepayment you can choose.
Personal loan prepayment is one of the best options to pay off your debt before the loan tenure ends. But, whenever a borrower plans to prepay the loan, then, bank seems to face the loss. But still there is nightmare namely known as prepayment penalty.
With normal personal loan, you have to pay the personal loan on the loan amount for the entire tenure period. If borrower plans to pay the borrowed finance before the end of tenure period, then, bank will lose all of interest that has to be paid for the rest of tenure. In order to cover that loss, banks levy prepayment charges on the borrower.
These prepayment charges on personal finance schemes may range from 2 to 3% of the borrowed loan amount. There are several banks including ICICI bank that charges up to 4%, PNB bank up to 2%, IDBI bank charges up to 2% of the prepayment penalty.
You should be confirming everything with your respective bank in case you are planning to go with the option of prepayment. Only few of the banks or financial institutions may charge lesser than others. Reserve bank of India or RBI is going to take some action in this regard soon enough and this will be imposed on every bank of India.Personal loan India are offered at higher rates in comparison to others and on top of all, high prepayment charges deters the practice of switching over the loan.
