Compare foreclosure charges across lenders: Why FIRSTmoney offers greater value

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. 

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:

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.