Loan Foreclosure Calculator

How the loan foreclosure calculator works

1. It rebuilds your repayment schedule and finds the principal left after the EMIs already paid.
2. It applies the foreclosure charge to that balance and adds 18% GST on the charge.
3. It adds up the EMIs you would still pay if you continued, takes away the principal, and calls the difference the interest you avoid.
4. Net saving = interest avoided − charge with GST.

On a ₹5,00,000 loan at 12% for 5 years with 18 EMIs paid, ₹3,79,914 is still owed. A 3% charge plus GST is ₹13,449, so closing costs ₹3,93,363 and saves about ₹73,770 overall. The lender may also add interest for the days since your last EMI.

When foreclosure saves little

Interest on a reducing balance loan is heaviest early. By the final stretch most of every instalment repays capital, so there is less interest left to avoid. Same loan, closed after 48 of 60 EMIs:

Near the end, a charge can wipe out most of the gain. In that case, using the money for something else, such as an emergency fund, may be wiser.

Foreclosure rules by loan type

• Home loans on floating rates, taken by individuals: no foreclosure or prepayment charge under RBI rules.
• Other floating rate term loans to individuals for non business use: also free of such charges.
• Fixed rate personal and car loans: a fee of a few percent of what is owed is typical, often allowed only after the first 6 to 12 instalments.
• Business loans and loans to companies: charges usually apply.

Your key fact statement and loan agreement list the exact terms.

How to foreclose a loan

1. Ask the lender for a foreclosure statement with the payoff amount valid up to a specific date.
2. Pay by the date shown, from your own account.
3. Collect the no dues or no objection certificate.
4. For secured loans, get original property papers back, or the hypothecation removed from a vehicle's registration.
5. Check your credit report after a month or two to see the loan marked closed.

Foreclose or part pay

If you cannot close the whole loan, a part payment still cuts interest. The prepayment calculator compares lowering the EMI with shortening the tenure. To see how much of your EMI is still interest right now, open the amortization schedule. For personal loans specifically, compare the saving here with the cost of keeping cash in reserve; the personal loan page rebuilds the original plan.

Interest for the broken period

Your last EMI paid interest up to its due date. If you foreclose 12 days later, the lender adds 12 days of interest on the outstanding principal: on ₹3,79,914 at 12% that is about ₹1,499. Ask for the payoff figure valid for a specific date and pay on that date, so the number does not change. Paying right after an EMI date keeps this extra small.