Loan Closure Policy

1. Loan Recall/Cool-Off

• Timeframe: A loan can be recalled or cooled-off within the first 4 days of the loan disbursement.
  • Example: If a loan is disbursed on January 1, 2023, it can be recalled until January 4, 2023.

Charges and Fees During Recall/Cool-Off

• Interest Charges- Appropriate APR will be applied if the loan is recalled within the recall period. However, currently, LoanFront provides a 100% discount on APR charges for loan recalls.
• Processing Fee- LoanFront retains a 4% processing fee, including GST, and returns the rest of the processing fee, including GST, for recalled loans. If the processing fee charged during disbursal is lesser than or equal to 4%, no additional processing fee discount will be provided for recalled loans.
  • Example- For a loan with a principal of ₹10,000 and a processing fee of ₹590 including GST, disbursed on January 1, 2023, if recalled on January 2, 2023, the customer will pay:
    • Principal: ₹10,000
    • Processing Fee Discount Adjustment: -₹590 + ₹472 = -₹118
    • Total Amount to Repay: ₹10,000 - ₹118 = ₹9,882

Loan Closure Restrictions

Conditions Where Loan Closure is Not Allowed:

• If any EMI (Equated Monthly Installment) has been paid.
• Partial loan recall is not permitted.

2. Early Closure Policy

Loan can be closed by paying the full loan amount including the appropriate charges. In the context of loan closure, preclosure, early closure, and foreclosure all refer to the same process and will incur preclosure charges.

Timing for Loan Closure

• Loan can be closed after 4 days from the date of disbursement.
  • Example: A loan disbursed on 1-Jan-2024 can be closed from 5-Jan-2024 onwards.

Loan Closure Restrictions

• Loan closure is not allowed if only one EMI is left to pay.
• Loan closure is not allowed if any EMI is overdue. After paying the overdue EMI, loan closure will be activated.

Preclosure Charges

• Charges depend on the loan age as follows:
  • (1/4 tenure) → 4%
  • (2/4 tenure) → 3.5%
  • (3/4 tenure) → 3%
  • (4/4 tenure) → 2.5%
• Charges are applied on the outstanding principal.
• GST at 18% will be applied on the charges.

3. Part Prepayment/Pre-closure Fees (INR):

The Borrower may prepay certain portion of the principal loan outstanding at any time prior to the Repayment/Due Date. The Borrower can prepay the EMI at least 7 days in advance of the due date of the EMI. For any installment due within the next 7 days, payment before the due date will not be considered as prepayment, and no waiver of interest will apply to such repayment before the due date. If the Borrower opts for the prepayment option to prepay the EMI amount or make a Part- Prepayment of a certain portion of the Loan amount (excluding Foreclosure payments), a prepayment fee shall be charged, such amount to be prepaid must be at least equal to the principal component of one installment/EMI. In case the Borrower chooses to prepay any installment, Prepayment Charges of 3% + GST on the principal amount prepaid will apply, after adjusting any due and/or overdue amounts. Any prepaid EMI amount shall not exceed the original EMI amount as defined in the repayment schedule provided in the Key Fact Statement (KFS) of the Loan Agreement.

Representative Example

To preclose or early close or foreclose a loan with a principal of Rs. 10,000 at a 20% interest rate disbursed on 1-Jan-2023 and foreclosed on 5-Jan-2023, the total repayment amount would be Rs. 10,499. This includes:

Detailed Calculation Steps

• Principal: Rs. 10,000
• Interest Rate: 20% per annum
• Loan disbursed on: 1-Jan-2023
• Foreclosure date: 5-Jan-2023
• Interest Charges:
• Interest for 5 days: 10,000 × 20% × 5 / 365 = 27
• Preclosure Charges:
• As loan is in the first quarter of its tenure (1/4 tenure): Preclosure Charge=10,000 × 4% = 400
• GST on Preclosure Charges:
• GST (18% on Preclosure Charges): GST = 400 × 18% = 72
• Total Repayment Amount:
• Total Repayment = Principal + Interest + Preclosure Charges + GST Total Repayment = 10,000 + 27 + 400 + 72 = 10,499

Thus, the borrower needs to pay Rs. 10,499 to close the loan.

Loan part-prepayment, EMI part-prepayment, Loan Part-payment, EMI Part-payment is not allowed. Customer can choose to pay EMIs in full