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Is there any Penal Charge for Prepayment of Loan ?

Penal Charge for Prepayment of Loan  – Yes, most banks allow you to repay the loan ahead of schedule by making lump sum payments. However, banks may charge a pre-payment penalty which may differ from bank to bank.

Pre-payment penalty may vary according to the sources of funds used to pre-pay the loan – if you avail of a loan from another bank to pre-pay the loan, charges are usually higher than when you pay from your own sources.

The details of pre-payment and associated charges form part of the sanction letter / loan agreement entered into with the concerned bank.

Incidentally, banks have been instructed by the Reserve Bank of India not to levy pre-payment charges on home loans taken on floating interest rates.

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