Savings accounts and loans are amongst the most common banking facilities almost all of us use. While it's good to focus on the selection of the right lender and then EMI repayment for loans, besides choosing suitable banks for your savings accounts, it's equally important to not be ignorant when closing those accounts and loans.
Carelessness in these steps can harm your financial health in lots of ways.
Let's deep dive a bit and understand that.
While switching from one job to another wherein a new bank account with some other bank needs to be opened, make sure you withdraw the balance in the previous account and initiate the process of account closure by filling the account closure form at the nearest branch and submitting the unused cheque book and card to the bank.
Failure to do this would easily result in the bank levying charges such as non-maintenance of minimum balance, which usually goes as high as Rs 600 to 1,000 per month. When your bank account does not experience any transaction initiated by you or a third party for more than 12 months, it gets classified as an inactive account. Since banks usually impose a number of restrictions on these accounts 'facilities such as net banking, ATM services, cheque transactions, phone banking etc., make sure you intimate the bank to initiate the account closure process.
However, before closing a bank account, remember to de-link it from existing investments, loans or credit cards, if any, and provide alternate bank account details to the lender/issuer in order to continue the linked deposit/payments.
And if you have applied for a personal loan with SBI, keep checking the SBI personal loan application status on its website or app. You can contact customer care too for getting regular updates on the status.
What is the procedure when you close a home loan account? What are the various forms of documents you have to fill? What documents must you ensure your lender hands over to you? The property document is one; is there any other? Is it different if you are pre-paying your loan? If property documents are misplaced, what should you do?
When you close your Home loan account post completion of all repayments at the end of loan tenure or on opting for full prepayment/foreclosure, make sure you obtain the No Objection/dues Certificate (NOC/NDC), which confirms that there are no outstanding dues on the part of the borrower. Also, recover all your original documents for instance bank account statements/bank statements, income proof, sale deed or deed of sale, possession letter & much more, that were submitted during the loan application. It would be prudent to obtain a loan track record from the beginning to the end of the loan period, along with a bank account statement and loan closure statement from the lender. Keep in mind that even if you are busy with other debt repayments like SBI personal loan or have applied for the loan and tracking the SBI personal loan application status for updates, don't be careless when closing other loans, especially a big one like a home loan.
Since lenders or banks or financial institutions sometimes put a lien against your property when they are unsure or not sure regarding your repayment capability, make sure you get the lien terminated from the registrar while closing or foreclosing the home loan account. In case the property documents get misplaced by the lender, the borrower should consider contacting the legal advisor at the earliest, to decide the next course of action.
Just like you regularly check your SBI personal loan application status after applying for the loan, check your credit report after about 1-2 months post-closure of loan account and receipt of all documentation to ensure that the closure is updated in the credit bureau's database. If not updated yet, follow up with your lender and after completion of the time frame given by the lender, place an online request with the concerned bureau to update your records. Also, if you have applied for an SBI personal loan as your home loan or LAP is getting closed, and you are relieved of repayment of that EMI, ensure to not go overboard by over-borrowing. Remember, loans have compulsory interest cost, which increases with an increase in loan amount!
What is the procedure while closing your car or two-wheeler loan? What are the various forms of documents you have to fill? What documents must you ensure your lender hands over to you? Is the procedure different if you pre-pay your loan?
Once you have completed the repayment of your car or two-wheeler loan, whether via foreclosure/full prepayment or upon payment of the last EMI, make sure you obtain an authenticated loan account statement for the entire loan period from your bank. The bank usually sends the No Objection Certificate (NOC) to you and a letter to the RTO & insurance company stating that the home loan or any other loan has been fully paid off. You need to then submit the NOC to the concerned insurance company and submit the copy of insurance papers along with the NOC to the RTO (Regional transport office). But remember, all this is not required in the case of SBI personal loan, as these are unsecured loans with no other party directly involved except the bank itself.
Post submission of these papers as well as the form for removal of the lender's endorsement, the RTO would give you an acknowledgement receipt which can be used as the RC book until you receive your RC with your name as owner and a stamp indicating that hypothecation and endorsement have been removed. Additionally, make sure you check your credit report after about one month post-closure of the loan account and receipt of all documentation to ensure that the closure is updated in the credit bureau's database. If not, follow up with your lender on this and after completion of the time frame given by the lender, if still not updated, place an online request with the concerned bureau to update your records.
Moreover, if you are thinking of opting or applying for an SBI personal loan for an amount more than required, just because your repayment capacity increased on other loan closures, just wait and pause. Only borrow the amount you actually need because you would need to repay both the principal and interest component when paying EMIs every month.
(4) What should you do to close your credit card loan? And is the procedure different if you are settling the loan as against paying it off in full?
Credit card issuers usually levy foreclosure charges of up to 3% of the outstanding principal amount on full prepayment of loan against credit card. However, partial prepayment is usually not allowed by most credit card issuers. A loan against credit card is considered 'closed' when you have made regular payments, and there are no outstanding amounts against your name, i.e. you have paid in full. And do not forget to avoid going for settlement until it's totally avoidable, as it has an adverse impact on your credit score & may impact your ability to obtain any form of credit in the near future. Due to bad credit history involving settlement, all this can even lead to rejection of your loan application when you check the SBI personal loan application status amidst the wait to hear from the lender.
