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Nowadays education loans have become an important part in a student’s life. People who aspire to take up higher education and do not have the finances for it, opt for educational loans. This loan is financed by the jobs, the students get into, after completion of their studies.
How to Close an Education Loan Through Creditseva
In simple words, closing an education loan is not a lengthy process unlike closing other loans. If you are intending to close an education loan, you need to see that the amount in the account becomes zero. Then you need to see that your passbook has been updated and it displays a zero balance. Finally, you need to request for the Certificate of Closure. The better way to close an education loan in a proper way without facing any tough situation is by taking the help of Credit advisory facilities of Creditseva and stay creditworthy. You just need to sign up, fill in your basic details and receive detailed as well as holistic insights of your credit-related data and thus maintain, improve your credit score in an easy and simple manner.
Procedure for Closing an Education Loan
Closing an education loan would be surely a moment of joy for the loan holder because a heavy duty responsibility of paying interest comes to an end. It starts with requesting the bank for a loan closure by sending them a letter. Followed by receiving a letter and a No Due Certificate from the bank in return (a letter which states that the account has been closed).
- Loan closure at the end of tenure: Nothing much needs to be done if you are closing your education loan at the end of tenure. You have to just make the payment for the last instalment and the loan is closed. After the end payment of the last EMI, you must write to your loan provider saying that the loan tenure has come to an end. You need to request them to return your documents.
- Loan Closure by Prepayment: The most important thing you need to do when you wish to prepay your education loan is to check the amount that has to be paid to the bank. The bank needs the approximate date and the borrower needs to request the bank so that the dues that are yet to be paid are calculated.
Steps to Foreclose an Education Loan
There are certain precautions to be taken while foreclosing an education loan. They are as follows
- You need to write a letter to the bank mentioning that you are willing to foreclose the education loan. You also need to ask how much balance amount is yet to be paid after calculating the interest.
- Usually, a foreclosure penalty is charged Some Banks might levy a foreclosure penalty. Technically, you are entitled to a rebate on account of interest for the period by which you have preponed the closure of your account.
- You need to get an SOA from the bank. The SOA should mention that there are no dues from your side.
- If there is any collateral against the education loan, you need to ask the bank to give back your documents after removing the lien from them.
Things To Be Done While Closing An Education Loan
Few important things have to be taken care of while you are closing your education loan. Some of the most crucial points are listed below
- Primarily, the entire outstanding amount should be paid off
- You need to visit the bank and ask the bank authorities to close the account. A written application may also be required.
- You need to ask the bank to provide you with a final account statement and also a letter which states that your account has been closed and there are no more dues.
Important Points To Be Kept in Mind While Closing An Education Loan
These points are to be carefully analyzed while you are in the process of closing your loan. If you fail to do so, you will be at a loss while the loan closure process.
- It is not compulsory if there is no collateral against the educational loan
- You have to see to it that only simple interest that has been charged on the education loan and not compounded interest.
- There is a rebate that can be passed on to you if you are a female student. You need to make sure that you have been provided with that rebate.
- There is a special gain for the person who has taken an education loan. This gain can be obtained when there is no default made in the instalment’s repayment and also when the interest is paid prior to the dates that are due. This gain is a refund of 1% interest.
- Sometimes, there is reimbursement of the interest charged by the bank on the education loan account. This is called a subsidy. You need to be aware of your eligibility for this advantage of an education loan.
- There is income tax deduction for the interest repaid on an education loan.
Sample Letter Format for Closing an Education Loan
The Bank’s Branch Manager
XYZ bank (Your Bank’s Name)
Subject: Request for closing the education loan account and NOC
I xyz (Your Name) have been holding an education loan account with your bank since n (number of years) years. I am willing to close this account. I request you to kindly tell me the total amount that is outstanding. Having known the amount that is outstanding, if any, I will clear all my dues at the earliest. I would also like to request you to provide me with a No Due Certificate that confirms that there are no more dues pending and also the closure of this educational loan account.
Xyz (Your name).
Education Loan Closure FAQs:
1. Will my closed education loan appear on the credit report?
Yes, even after closing an education loan, it is still going to appear on your credit report. It usually appears for a period of 7-10 years.
2. Can I close my education loan account online?
Yes, you can do so. You can do this online by logging into your account.
3. What is the procedure to close the education loan online?
Firstly you need to be sure that there is enough balance in your account when you are willing to close the loan account.
The next step is to select the E- services tab from the top and choose Closure of Loan A/c from the list. Subsequent to entering the details, you need to send a request to the bank for the closure.
4. How much time does it take to close an education loan?
Normally, it takes one day to close an education loan.
5. What should be done immediately after the education loan is closed?
After the loan account has been closed, you need to collect an up-to-date SOA (Statement of Account)
6. Is there a subsidy provided even for a closed education loan?
In case you have closed your education loan before the end of its tenure, the interest subsidy has to be credited the savings account that is connected to your educational loan.
7. How would I close my education loan account if i stay abroad?
In case you stay abroad, you need to verify with the bank if you can send a person instead of you, to take care of the procedures for closing the loan with the bank.
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