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Personal Loan

Compare foreclosure charges across lenders: Why FIRSTmoney offers greater value

Key Takeaways

Foreclosure charges are levied when you repay a personal loan before the end of its tenure.
IDFC FIRST Bank, as part of its customer-centric approach, offers zero foreclosure charges with FIRSTmoney smart personal loans, allowing borrowers to repay their loans early without barriers.
By choosing FIRSTmoney, borrowers can benefit from competitive interest rates and the option to foreclose their loans early, potentially saving on interest costs without incurring significant penalties.

06 Oct 2025 by IDFC FIRST Bank

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Financial obligations can arise unexpectedly, prompting you to look for personal loans for various purposes. While a personal loan can provide essential funds, repaying it often comes with additional costs, such as foreclosure charges.

Foreclosure charges, also known as prepayment penalties, are fees imposed by lenders when you decide to pay off your loan before the tenure ends. These charges can impact your financial planning, but not all banks impose hefty fees. IDFC FIRST Bank is one of the few lenders that offers a more customer-friendly approach to foreclosure charges with its FIRSTmoney smart personal loan.

Before delving into how you can get freedom from foreclosure charges with FIRSTmoney, it is crucial to understand the basics first.

How to finance your home gym without burning through your savings

Have no fear, your Personal Loan Top-Up is here!

What is a personal loan?

A personal loan is an unsecured loan that can be used for various purposes, such as medical emergencies, home renovations, travel expenses, or debt consolidation. Unlike other loans, personal loans don’t require collateral, making them easily accessible to individuals in need of quick funds. However, because they are unsecured, personal loans typically come with comparatively higher interest rates. When taking a personal loan, it’s crucial to consider the repayment terms, including potential foreclosure charges, as they can greatly impact your overall financial health.

Understanding foreclosure charges

Foreclosure charges are fees that some banks impose if you decide to repay your personal loan before the agreed tenure. These charges exist because lenders lose out on potential interest earnings when a loan is paid off early. The amount charged can vary significantly, depending on the bank's policies and your loan agreement. In some cases, foreclosure charges can go up to 4% - 5% of the outstanding loan amount, which can be a substantial sum.

Here’s a quick comparison of foreclosure charges across popular banks and NBFCs, as of June 2025:

Lender	Foreclosure Charges	Lock-in Period
IDFC FIRST Bank	0%	Anytime after the first EMI
HDFC Bank	2%–4% of outstanding principal	After 24 EMIs
ICICI Bank	3% of outstanding principal	Before 12 EMIs, later Nil
Axis Bank	2%–3% depending on the EMIs paid	After 12 EMIs
Bajaj Finserv	4.7%	-
Tata Capital	2%–4%	After 12 months
Kotak Mahindra Bank	2-4% depending on EMIs paid	-

Note: Charges are indicative and may vary depending on loan type, borrower profile, and other terms. Always check the latest terms before applying.

Personal loan foreclosure: Key facts you should know

Foreclosing your personal loan can help you reduce long-term interest costs—but only if done right. Here are some essential facts to keep in mind before deciding to foreclose:

Foreclosure isn’t always free: Many lenders charge foreclosure fees ranging from 2% to 5% of the outstanding principal, which can reduce or even nullify the benefits of early repayment.
Always calculate the savings: Before foreclosing, compare the total interest you would save versus the foreclosure charges you’ll incur. If the savings are marginal, it may be better to continue with regular EMIs.
Check the timing rules: Some banks allow foreclosure only after a lock-in period (e.g., after 6 or 12 EMIs). Attempting foreclosure earlier may either not be allowed or come with higher charges.
Look for borrower-friendly lenders: Institutions like IDFC FIRST Bank offer zero foreclosure charges on personal loans—making it financially wiser to repay early when you’re ready.
FIRSTmoney advantage: If you opt for a personal loan via FIRSTmoney, you enjoy a smoother experience with no foreclosure penalties, flexible repayment options, and competitive interest rates.

FIRSTmoney by IDFC FIRST Bank: Enjoy zero foreclosure charges and more

IDFC FIRST Bank’s FIRSTmoney smart personal loan offers a flexible borrowing experience tailored to your needs. Here’s why it stands out:

Zero foreclosure charges: Repay your loan early without paying any penalty. Enjoy complete freedom to foreclose when you're financially ready.
High loan amount: Borrow up to ₹10 lakhs based on your eligibility, with the flexibility to repay the loan in tenures ranging from 9 months to 60 months.
Competitive interest rates: Get access to attractive, market-aligned interest rates starting from 9.99% that make borrowing smarter and more affordable.
Multiple on-demand loans: Enjoy the convenience of opting for additional loan amounts with just a single application to meet your extra fund requirements.

How to benefit from zero foreclosure charges with IDFC FIRST Bank

Understand your loan terms:

Before taking a personal loan, carefully read the terms and conditions related to foreclosure charges. IDFC FIRST Bank provides transparent information regarding their fees and charges, and offer zero foreclosure charges on FIRSTmoney personal loans.

Plan your finances:

If you anticipate repaying your loan early, consider choosing a lender like IDFC FIRST Bank, where there is no foreclosure charge applied. This will give you the freedom to manage your finances without worrying about additional costs.

Consult with bank representatives:

If you’re unsure about the foreclosure process, consult a representative from IDFC FIRST Bank. They can provide detailed information and help you understand the best course of action for your financial situation.

Make timely payments:

To avoid complications when foreclosing your loan, ensure that all your EMI payments are made on time. This will also positively impact your credit score, making it easier to obtain loans in the future.

Evaluate the benefits:

Before deciding to foreclose your loan, evaluate the benefits versus the costs. If the foreclosure charges are minimal, or nil as in the case of IDFC FIRST Bank, it might be advantageous to repay your loan early and save on any prepayment charges.

Apply today to experience flexibility and convenience with IDFC FIRST Bank

Foreclosure charges can be a barrier for anyone looking to repay their personal loan early. However, with a customer-centric personal loan such as FIRSTmoney, you won’t be bogged down by these charges.

IDFC FIRST Bank not only offers competitive rates but also provides the flexibility to repay your loan early, ensuring that you can manage your finances in a way that best suits your needs. If want freedom from foreclosure charges, IDFC FIRST Bank could be the ideal choice for your personal loan.

Frequently Asked Questions

How can I avoid foreclosure charges?

Most lenders levy a fee when you repay your loan early. However, IDFC FIRST Bank’s FIRSTmoney loan offers a standout benefit—zero foreclosure charges. This means you can repay your entire loan amount any time without worrying about incurring any prepayment penalties.

Does foreclosure affect CIBIL score?

Foreclosure can have a positive impact on your CIBIL score, as it reflects responsible credit behaviour and reduces your credit burden. With products like FIRSTmoney, you not only enjoy flexibility but also improve your creditworthiness over time.

What is the EMI foreclosure fee?

Typically, lenders charge a foreclosure fee ranging from 2% to 5% of the outstanding loan amount. But with FIRSTmoney from IDFC FIRST Bank, you pay zero foreclosure fees, making it a cost-effective option for early repayment.

What exactly are foreclosure charges on a personal loan?

Foreclosure charges are fees that may apply when you close your loan before the scheduled end date. They are different from EMIs and prepayment charges, which apply to part payments. IDFC FIRST Bank’s FIRSTmoney smart personal loans come with zero foreclosure charges, letting you close your loan early without a penalty.

Does IDFC FIRST Bank really offer zero foreclosure charges?

Yes. IDFC FIRST Bank offers FIRSTmoney Smart Personal Loans that have zero foreclosure charges, so you can close the loan early without a penalty. You can view details about other fees and charges here.

How soon can I close my loan without paying any penalty?

The earliest point at which you can close a personal loan without penalty depends on the lock-in period and product terms. Some loans have a minimum number of EMIs that must be paid before foreclosure. Always review your sanction letter, MITC, or loan agreement for these specifics. Contact customer service to confirm whether the current policy allows early closure at no cost and obtain a written settlement quote. With FIRSTmoney, you can close your loan early anytime during the loan tenure of 9 to 60 months.

Is there a difference between foreclosure and prepayment?

Foreclosure and prepayment are different. Foreclosure is when you pay off the entire outstanding balance in one go, which closes your loan completely. Prepayment usually refers to paying only a part of the outstanding balance before schedule, which reduces either tenure or EMI while keeping the loan active. Both actions can affect interest savings and repayment schedules differently. Review your lender’s policies on each, including fees, lock-in periods, and revised amortisation schedules.

Will closing my loan early affect my credit score?

Closing a loan early can influence your credit profile based on how it is reported. If the closure is updated correctly, the account will show as closed with zero balance, which may help over time. A history of on-time payments leading to early closure can reflect positively, while multiple short-lived loans may appear differently. Monitor your credit report after foreclosure and raise a dispute if the closure is not updated.

How do I foreclose my personal loan at IDFC FIRST Bank?

You can use IDFC FIRST Bank’s mobile app to foreclose your loan online. Visit the loans section on the app and choose FIRSTmoney --> "Click on Make Payment' Enter details and select a payment method. You can foreclose your FIRSTmoney smart personal loan with zero foreclosure charges. After successful payment, download the foreclosure letter and No Dues Certificate and check your credit report later to confirm the loan is closed with zero balance.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirstbank.com for latest updates.