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IndusInd Bank Personal Loan Pre-closure Charges

While the repayment tenure for IndusInd Bank Personal Loan is for up to 7 years, the existing loan borrowers have the option to foreclose their personal loan account. But before doing that, you should know about the charges, benefits and disadvantages of pre-closing your loan. Here is everything you should know about IndusInd Bank Personal Loan Preclosure.

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IndusInd Bank Personal Loan Preclosure Charges

Preclosure Charges / Prepayment Charges
  • 5% of Principal Outstanding + GST, post payment of 1st EMI up to 11 EMIs
  • 4% of Principal Outstanding + GST, after payment of 12 EMIs

Rates updated as on 23 June 2025.

What are the Benefits of Pre-closing your Personal loan?

Increased EMI Affordability

Lenders offer loans to applicants whose total EMI is within 50-60% of their total monthly income. This also includes their existing EMI and the EMIs for new loans. As a result, applicants exceeding this income limit have less chances of availing personal loans. However, consumers can easily reduce their EMI/NMI ratio and improve their eligibility for availing other loans by prepaying their existing personal loans.

Savings on cost of interest

Consumers availing personal loans can also save on their interest costs by prepaying the loan amount that they would have otherwise incurred during the loan tenure. For instance, if you availed a personal loan of Rs 10 lakh at 13% p.a. And repayment tenure of 5 years, then the EMI would be Rs 22,753 and total interest would be Rs 3.65 lakh. However, consumers can easily save on the cost of up to Rs 2.44 lakh if they repay the outstanding personal loan after a year.

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Reduced Share of Unsecured Loans in Credit Mix

Credit mix is the ratio of unsecured and secured loans. By prepaying the outstanding loan amount of IndusInd Bank Personal Loan, consumers can reduce the proportion of unsecured loans in their credit mix. An increased share of secured loans will help improve their credit score and increase the chances of getting another loan.

Also Read: How you can build or rebuild your credit score with  Step UP Credit Card co-branded with SBM Bank India Ltd.

What are the Disadvantages of Pre-closing Personal Loan?

Negative impact on liquidity

Many borrowers exhaust their existing investments to prepay their personal loans, which in turn, affects their emergency funds that they save for various emergency situations. Exhausting the existing investments can force the borrowers to avail personal loan at higher interest rates to meet their financial needs or emergencies. In that case, consumers should consider reducing their prepayment burden and cost of interest by using the personal loan balance transfer facility and transfer their existing loan to lenders offering lower personal loan interest rates.

Preclosure charges

IndusInd Bank charges a prepayment fee of up to 4% after the payment of 12 EMIs plus applicable taxes. Borrowers who want to pre-close their personal loan accounts can do so by paying the prepayment charges, which will however, reduce their interest cost savings. For that reason, consumers who want to prepay their personal loans should consider opting for it only if their net savings are significant enough after accounting the prepayment charges.

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Step 1: Enter your mobile number in the application form

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Step 5: Compare offers and apply for the best-suited loan

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