Key takeaway
Prepayment is paying part of the loan early; foreclosure is closing the whole loan before its tenure ends.
What is the difference between prepayment and foreclosure?
Prepayment is paying part of the loan early; foreclosure is closing the whole loan before its tenure ends.
Are there charges for prepaying a loan?
For floating-rate term loans taken by individuals for non-business purposes, RBI rules do not allow foreclosure or prepayment charges. Fixed-rate and business loans may carry charges as per the loan agreement.
Should I reduce EMI or tenure after prepayment?
Reducing tenure usually saves more interest. Reducing EMI improves monthly cash flow. Use our part-payment calculator to compare.
Frequently asked questions
Collect the loan closure / no-dues certificate, original property documents (for secured loans), and ensure the lender updates the credit bureau and removes any charge on the asset.
Sources & editorial policy
Content is researched from official sources such as the Reserve Bank of India (RBI), credit bureaus and lender websites, and reviewed periodically. Rates and charges change often – always confirm the latest terms with the lender.