Personal Loan Prepayment Charges: In this digital age, people take out personal loans whenever they need money. The convenience of personal loans seems quite convenient. However, according to the rules, the prepayment penalty is the most important rule in personal loans. This penalty is levied if you repay the loan before the end of the term. Typically, this fee ranges from 1% to 5% of the outstanding amount.
Many NBFCs, such as Bazaar Finserv, charge prepayment charges of approximately 4.72%. Different banks set their own terms and conditions. Therefore, it is crucial to understand certain rules before taking a loan.
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RBI Changed Guidelines
The RBI recently proposed eliminating prepayment and foreclosure charges on floating-rate personal loans. If implemented, these rules could provide relief to millions of people in the MSME sector. The RBI sought suggestions from stakeholders on this proposal. The simple purpose of this move is to encourage people and reduce their burden.
Borrowers will benefit
Many people are hesitant to repay their loans early due to prepayment charges, but doing so could result in significant interest savings. This charge could be eliminated in the future. Customers with floating-rate loans will be able to repay their loans without any additional costs. This requires carefully reading the fine print of the loan agreement and understanding the applicable fees.
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How to Avoid Prepayment Charges
Many banks, such as IDFC First Bank, do not charge any prepayment penalty on personal loans. Borrowers can avoid this expense by choosing this option. Before taking out a loan, be sure to assess your financial situation and understand the interest charges. While obtaining a loan is easy, repaying it can be quite difficult.
