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Personal Loan

Looking to save on interest? Pick a personal loan with zero foreclosure charges

Key Takeaways

Foreclosure charges are levied when you repay a personal loan before the end of its tenure.
IDFC FIRST Bank, as part of its customer-centric approach, offers zero foreclosure charges with FIRSTmoney smart personal loans, allowing borrowers to repay their loans early without barriers.
By choosing FIRSTmoney, borrowers can benefit from competitive interest rates and the option to foreclose their loans, potentially saving on interest costs without incurring significant penalties.

09 Jun 2026 by IDFC FIRST Bank

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Foreclosure is the process of fully repaying your loan amount before the scheduled tenure ends. Choosing to foreclose your loan is often a wise choice if you have the funds, but you need to be wary of possible charges. Many lenders charge a 'foreclosure charge' or fee for early loan termination (usually a percentage of the unpaid principal).

Knowing how these charges work can help you avoid unnecessary costs. Moreover, some lenders, such as IDFC FIRST Bank, charge no foreclosure fees, allowing you to repay your loan as you like without worrying about additional costs.

How to finance your home gym without burning through your savings

Have no fear, your Personal Loan Top-Up is here!

What is a personal loan?

A personal loan is an unsecured loan that can be used for various purposes, such as medical emergencies, home renovations, travel expenses, or debt consolidation. Unlike other loans, personal loans don’t require collateral, making them easily accessible to individuals in need of quick funds.

When taking out a personal loan, it’s crucial to consider the repayment terms, including potential foreclosure charges, as they can significantly affect your overall financial health.

What are foreclosure charges?

Foreclosure charges are fees that some banks impose if you decide to repay your personal loan before the agreed tenure. These charges exist because lenders forgo potential interest earnings when a loan is paid off early. The amount charged can vary significantly, depending on the bank’s policies and your loan agreement. In some cases, foreclosure charges can reach 4%-5% of the outstanding loan amount, which can be a substantial sum. However, in the case of FIRSTmoney personal loan by IDFC FIRST Bank, you can enjoy zero foreclosure charges.

Here’s a quick comparison of foreclosure charges:

Lender	Foreclosure Charges	Lock-in Period
IDFC FIRST Bank FIRSTmoney personal loan	0%	No lockin period
Other banks	2% – 4% of outstanding principal	Typically 12 to 24 EMIs

What is the real cost of foreclosure?

Let’s move beyond theory and look at a practical example to understand the real financial impact.

Suppose you take a personal loan of ₹5,00,000 for 3 years at an interest rate of 12%. After 18 months, you decide to foreclose the loan. Outstanding loan amount after 18 months: ~₹2,75,000, and the typical foreclosure charge is 4%.

Now compare the two scenarios:

Particulars	With foreclosure charges	With zero foreclosure charges (FIRSTmoney)
Outstanding amount	₹2,75,000	₹2,75,000
Foreclosure charges	₹11,000	₹0
Total payable at foreclosure	₹2,86,000	₹2,75,000
Direct saving	—	₹11,000

This saving comes on top of the interest you avoid paying for the remaining tenure. For higher loan amounts or longer tenures, the difference can be even more significant. In other words, foreclosure charges can reduce the benefit of early repayment. Choosing a loan without such charges allows you to retain the full advantage.

How do I foreclose my personal loan at IDFC FIRST Bank?

You can use IDFC FIRST Bank’s mobile app to foreclose your loan online or use the Quick Pay link.

Log in to the IDFC FIRST Bank app
Tap on loans and select the Loan Account Number you want to foreclose
Then tap on “Foreclose with 0 charges”
Now, choose your payment method and complete the payment.

Once your payment is processed, the loan will be successfully closed.

How to obtain the No Dues certificate for your loan?

Log in to the Mobile Banking app and tap on the 'Loans' icon at the bottom of the screen
Under My Loans, tap on the loan card. In case the card is not visible, tap on 'Closed Loans'.
Under the list of documents, tap on Download against 'No Objection Certificate'

What are the key facts you should know about personal loan foreclosure?

Foreclosing your personal loan can help you reduce long-term interest costs, but only if done right. Here are some essential facts to keep in mind before deciding to foreclose:

When does it make sense to foreclose your personal loan early?

Foreclosing your loan may not always the right move. The decision depends on your financial position and the trade-off between liquidity and savings. Here’s a practical way to evaluate it:

1. Foreclose early if

a. You have surplus funds that are not needed for emergencies

b. Your loan carries a relatively high interest rate

c. There are no foreclosure charges (or they are negligible)

d. You want to reduce your debt obligations quickly

In such cases, early closure can lower your total interest outgo and improve your financial position.

2. Hold the loan if:

a. You may need liquidity for upcoming expenses (medical, business, or personal)

b. Your loan interest rate is already competitive

c. Foreclosure charges are high enough to offset the benefit

d. You can deploy your surplus funds in an avenue that yields better returns than your loan interest rate

In these situations, keeping the loan running may be more practical than closing it early.

Why should you consider IDFC FIRST Bank’s FIRSTmoney personal loan?

While personal loans offer quick access to funds, foreclosure costs can reduce the benefit of early repayment and affect your financial planning. This means that even when you’re financially ready to repay your loan ahead of schedule, you may end up paying a penalty for it.

This is where IDFC FIRST Bank’s FIRSTmoney takes a different approach. Instead of penalising early repayment, it allows you to foreclose your loan without any additional charges.

Here’s why it stands out:

1. Zero foreclosure charges

Repay your loan early without paying any penalty. Enjoy complete freedom to foreclose when you're financially ready.

2. High loan amount

Borrow up to ₹15 lakhs based on your eligibility, with the flexibility to repay the loan in tenures ranging from 9 months to 60 months.

3. Competitive interest rates

Get access to attractive, market-aligned interest rates starting from 9.99% p.a. that make borrowing smarter and more affordable.

4. Multiple on-demand loans

Enjoy the convenience of adding additional loan amounts from your approved loan offer, without reapplying from scratch. Get instant funds in as little as 10 minutes.

Apply today to experience flexibility and convenience with IDFC FIRST Bank

Foreclosure charges can be a barrier for anyone looking to repay their personal loan early. However, with a customer-centric personal loan such as FIRSTmoney, you won’t be bogged down by these charges.

IDFC FIRST Bank not only offers competitive rates but also provides the flexibility to repay your loan early, ensuring that you can manage your finances in a way that best suits your needs. If you want freedom from foreclosure charges, IDFC FIRST Bank’s FIRSTmoney personal loan can be the ideal choice for you.

Frequently Asked Questions

How can I avoid foreclosure charges?

Choose FIRSTmoney personal loan by IDFC FIRST Bank that offers zero foreclosure charges. You can repay your entire loan amount at any time without worrying about incurring any penalties. You can foreclose the loan easily via the Bank app.

Does foreclosure affect CIBIL score?

Foreclosure can have a positive impact on your CIBIL score, as it reflects responsible credit behaviour and reduces your credit burden.

What is the EMI foreclosure fee?

Typically, lenders charge a foreclosure fee ranging from 2% to 5% of the outstanding loan amount. But with FIRSTmoney personal loan by IDFC FIRST Bank, you pay zero foreclosure fees, making it a cost-effective option for early repayment.

How soon can I close my loan without paying any penalty?

The earliest point at which you can close a personal loan without penalty depends on the lock-in period and product terms. Some loans require a minimum number of EMIs to be paid before foreclosure. Always review your sanction letter, MITC, or loan agreement for these specifics. Contact customer service to confirm whether the current policy allows early closure at no cost and obtain a written settlement quote.

With FIRSTmoney, you can close your loan early at any time during the 9- to 60-month loan tenure.

Is there a difference between foreclosure and prepayment?

Foreclosure and prepayment are different from each other. Foreclosure is when you pay off the entire outstanding balance in one lump sum, which closes your loan. Prepayment usually refers to paying only a portion of the outstanding balance before the scheduled date, which reduces either the tenure or the EMI while keeping the loan active. Both actions can affect interest savings and repayment schedules differently. Review your lender’s policies on each, including fees, lock-in periods, and revised amortisation schedules.

Will closing my loan early affect my credit score?

Closing a loan early can affect your credit profile, depending on how it is reported. If the closure is updated correctly, the account will appear closed with a zero balance, which may help over time. A history of on-time payments leading to early closure can reflect positively, while multiple short-lived loans may appear differently. Monitor your credit report after foreclosure and dispute any inaccuracies if the foreclosure is not updated.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirst.bank.in for latest updates.