Queries

Check Prepayment Penalty Clause Before Taking A Loan M. Sreevalsan I want to prepay my car loan, but the non-banking finance company (NBFC) lender will levy a penalty for doing that. Is there indeed a penalty for prepaying a loan? These are the foreclosure charges, which can be 1-3 per cent of the outstanding principal amount or more. Check with your NBFC if there are any part prepayment charges. Part prepayment means that the borrower will pay some extra amount, in addition to the regular equated monthly instalment (EMI), to reduce the loan. Sometimes, there are no charges or penalties on these. While taking a loan, one also needs to check all aspects of the loan, such as penalty on foreclosure and/or part prepayment, floating or fixed rate of interest rate, and so on. One can also negotiate with the bank or NBFC to waive these charges. Apart from these, some lenders also offer...