Foreclosure charges explained: How to avoid hidden fees on personal loans

Taking a personal loan often feels like a financial relief as you get instant funds, easy EMI plans, and quick approvals, all without any collateral requirements. Although there is a fixed repayment schedule, many borrowers prefer to close their loans early when they have surplus funds. This is where foreclosure charges can come into play. These charges can reduce the savings you expect from closing a loan ahead of schedule.

Let us take a closer look at the meaning of foreclosure charges and what you can do to avoid them.

What are foreclosure charges?
 

Foreclosure charges are fees lenders levy when you repay your personal loan before the scheduled end date. While early repayment seems like a responsible move, lenders do this to recover the interest income they expected to earn had you committed to the full term.

Lenders usually charge between 2% and 6% of your outstanding loan amount as foreclosure charges. This percentage varies based on your lender and the terms agreed upon. So, in case you borrowed ₹5 lakh and want to foreclose after a year, you might end up paying ₹10,000 to ₹30,000 just in fees.

How to avoid foreclosure charges on personal loans?
 

Early repayment is a sensible choice when you have surplus funds. However, many banks impose foreclosure charges that make early repayment more expensive than it should be. That is why choosing a personal loan without foreclosure charges is a smart financial move. You can consider IDFC FIRST Bank’s FIRSTmoney to get the freedom to close your loan whenever you are ready without paying any foreclosure fees. Just pay the outstanding amount, no hidden costs, no penalties.

But zero foreclosure charges are not the only advantage. IDFC FIRST Bank’s FIRSTmoney brings countless additional benefits designed to support your financial needs:

· Fully digital application
 

You can apply online from any location with just your PAN needed for the video KYC process. There are no complex documents or branch visits involved.

· Fast approval and disbursal
 

Once your application is approved, the loan amount may be credited to your account in around 30 minutes. This is highly beneficial for emergencies or urgent needs.

· Flexible loan amount
 

You can borrow up to ₹10 lakh based on your eligibility and handle large as well as small expenses. 

· Competitive interest rates
 

With IDFC FIRST Bank's FIRSTmoney, you enjoy one of the most affordable interest rates in the industry, starting from 9.99% per annum. 

· Multiple on-demand loans
 

Although the loan amount can go up to ₹10 lakh, you can easily choose smaller amounts like ₹2 lakh, ₹3 lakh, ₹4 lakh or ₹5 lakh from your approved loan amount based on your needs.

· Easy repayment options
 

Pick a repayment duration based on your income and expenses. You are free to choose a shorter tenure to save on interest or a longer one for lower monthly payments.

Steps to apply for IDFC FIRST Bank’s FIRSTmoney
 

Look at the steps to obtain a quick digital personal loan:

• Start by scanning the QR code or clicking on the “Apply Now” button on your smartphone.
• Register using your mobile number and confirm basic/personal details to check your eligibility.
• Select the loan amount of your choice starting from ₹50,000 up to your approved loan offer and choose flexible repayment terms. 
• Link your bank account where you wish the funds to be disbursed.
• Complete the Video KYC verification process with your physical PAN card.

Conclusion
 

If avoiding foreclosure charges is your priority, IDFC FIRST Bank’s FIRSTmoney is a practical solution. Avoiding foreclosure charges could save you thousands. That is money better spent on investments or emergencies, not on avoidable penalties. Alongside zero foreclosure fees, this smart borrowing solution also offers quick digital access, affordable interest rates, flexible loan amounts, no complex documentation, and easy repayment options.  

IDFC FIRST Bank’s FIRSTmoney lets you borrow with clarity, repay at your convenience, and manage every step without hidden costs. Apply now!