| Foreclosure Charges |
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| Part-prepayment Charges | Rs 500 plus GST per instance |
Kotak Mahindra Bank Personal Loan Preclosure Charges
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Kotak Mahindra Bank Personal Loan Preclosure & Part-Prepayment Charges
Restrictions on Part-prepayment of Kotak Bank Personal Loan
Benefits of Personal Loan Preclosure
Lower proportion of unsecured loans in credit mix
Credit mix is the ratio of unsecured and secured loans. Because Kotak Mahindra Bank personal loan are unsecured, prepaying the loans would help reduce the proportion of unsecured loans in your credit mix. This will further help improve your credit score and increase the chances of availing another loan.
Savings on cost of interest
You can also save on the total cost of interest that you would have to pay during the repayment period. For instance, if you avail a personal loan of Rs 12 lakh at 10% p.a. and repayment tenures of 5 year, the EMI would be Rs 25,496 and total interest cost would be Rs 3.29 lakh. That said if you pay the outstanding loan amount after a year, you can save interest cost of up to Rs 2.18 lakh.
Increased EMI affordability
Banks consider lending to applicants whose total EMIs including the existing EMI and the EMIs for new loans, are within 50-60% of their total monthly income. For that reason, applicants exceeding this income limit might have less chances of availing loans. That said, you can easily improve your loan eligibility and reduce the EMI/NMI ratio if you prepay your existing personal loan.
Disadvantages of Kotak Mahindra Personal Loan Preclosure
Prepayment charges
Kotak Mahindra Bank charges a prepayment fee of up to 4% on the outstanding loan amount in cases of personal loans availed at fixed interest rates. Customers who wish to pre-close their personal loan accounts can do so by paying the prepayment charges, which will also reduce their interest cost savings. So you should only prepay your personal loan if you have enough net savings after accounting the prepayment charges.
Negative impact on liquidity
Many borrowers exhaust their existing investments to prepay their loans, which affects their emergency savings that they would have used in emergency situations. Personal loan prepayment using existing savings can also force the borrower to avail loans at higher interest rates. In this case, borrowers should only opt for personal loan preclosure if they have sufficient savings/emergency funds. Moreover, borrowers with restricted liquidity can also reduce their repayment burden and cost of interest by opting for a personal loan balance transfer facility to transfer their existing personal loan to another lender offering lower personal loan interest rates.
Avail Personal Loan for
All Your Needs

Avail Personal Loan for
All Your Needs
How Can I Apply for a Personal Loan Online?
Get up to ₹40 Lakh in 5 Simple Steps
Step 1: Enter your mobile number in the application form
Step 2: Provide your personal details
Step 3: Enter OTP to verify your mobile number
Step 4: Select the loan purpose and loan amount
Step 5: Compare offers and apply for the best-suited loan
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Overview
Personal Loan Articles
View All ArticlesPaisabazaar is a loan aggregator and is authorized to provide services on behalf of its partners.
The APR (Annual Percentage Rate) of a personal loan is its annualised cost of borrowing, which includes the interest rate as well as the processing fees, documentation fees and other fees charged during the loan origination. The APR is expressed in the form of a percentage and thus, allows personal loan applicants to detect personal loan schemes offered at lower interest rates but with higher processing fees and/or other charges.
The APR of personal loans usually ranges between 11.29% to 35%. For example, assume that you have availed a personal loan of Rs. 5 lakhs @ 10.50% p.a. with a repayment tenure of 5 years. The processing fee charged for this loan is 1.5% of the loan amount, which amounts to Rs 7,500. Therefore, the total borrowing cost of your personal loan will be Rs 1,52,317 and its APR will be 11.16%.
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