How to Close a Personal Loan Offline: A Complete Step-by-Step Guide

Why Closing a Personal Loan Correctly Is Important

Personal loans serve as a financial lifeline during emergencies such as medical expenses, education fees, or urgent personal needs. However, when the time comes to close the loan, many borrowers find the offline process confusing. Understanding the correct steps ensures a smooth closure, avoids unnecessary penalties, and protects your credit score.

While procedures may slightly vary from one bank to another, the core process remains largely similar across financial institutions.

Step-by-Step Guide to Close a Personal Loan Offline 1. Find Out the Outstanding Loan Amount

Begin by visiting your bank branch and enquiring about the outstanding balance on your personal loan. It is important to get a detailed breakup of the amount, including any pre-closure fees or penalty charges that might apply if you plan to close the loan ahead of schedule.

2. Decide How You Want to Close the Loan

There are two ways to close a personal loan:

• Foreclosure: Paying off the loan before the end of the loan tenure.

• Regular Closure: Closing the loan after completing all scheduled EMI payments.

Check with your bank for any pre-closure charges and ensure you understand the process based on your chosen option.

3. Submit the Loan Closure Application Form

Collect the loan closure application form from your bank. Fill it with necessary details such as:

• Loan account number

• Name of the borrower

• Type of closure (foreclosure or regular)

• Preferred payment method (bank transfer, cash, or cheque)

Submitting this form officially initiates the closure process.

4. Make Full Payment of Dues

Upon submission, the bank will calculate the final payable amount, including any outstanding EMIs, interest, and additional fees. You can make the payment through demand draft, cash, cheque, or RTGS/NEFT as per bank instructions.

For regular loan closure, ensure all EMIs have been cleared. Always collect payment receipts and acknowledgement slips after making the payment to avoid any future disputes.

Important Tip: Collect the Loan Closure Certificate

After clearing all dues, request a loan closure certificate from the bank. This document is critical proof that your loan account has been officially closed and can be vital for maintaining your CIBIL score and future loan applications.

Following these simple steps can help you close your personal loan without confusion and safeguard your financial records.