What are the closure charges on car loan?

Planning to close your car loan? Read this article to know the charges you may have to pay.
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What are the closure charges on car loan?
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3 min
10-September-2024
Car loan closure is the process of paying off the entire outstanding loan amount before the end of the loan tenure. It is important because it helps in clearing your debt, improving your credit score, and reducing future interest payments. The benefits include financial freedom, savings on interest, and ownership of the vehicle. However, lenders may charge foreclosure fees for early repayment. Understanding these charges and methods to pay them is crucial for effective financial planning. For more details, visit Loan Foreclosure.

Car loan foreclosure charges

Loan AmountForeclosure Charges
Up to Rs. 10,0002% of the principal outstanding
Rs. 10,001 to Rs. 25,0004% of the principal outstanding
Rs. 25,001 to Rs. 50,0005% of the principal outstanding
Above Rs. 50,0006% of the principal outstanding


For a comprehensive list of fees and charges, refer to Bajaj Finserv Fees and Charges.

How to pay car loan closure charges?

You can pay car loan closure charges through online and offline methods:

  • Online method:
  1. Log in to your lender’s online portal.
  1. Navigate to the loan account section.
  1. Select the option for loan closure or foreclosure.
  1. Follow the instructions to make the payment using net banking, debit card, or other available options.
  • If you have a car loan with Bajaj Finance and want to check the foreclosure or loan closure charges, you can:
  1. Login to your account with Bajaj Finserv using your registered mobile number
  1. Click on “Account” and then click on “Your relations” to select your active car loan
  1. After selecting your active car loan, click on “Fees & Charges” and then click on “View All” to see all the fees and charges applicable.
  • Offline Method:
  1. Visit the nearest branch of your lender.
  1. Request the foreclosure form and fill it out.
  1. Submit the form along with a cheque or demand draft for the foreclosure amount.
  1. Obtain the acknowledgement receipt for your records.

Documents required to pay car loan foreclosure charges

  • To pay car loan foreclosure charges, you typically need the following documents:
  • Loan account number
  • Identity proof (Aadhar card, PAN card, etc.)
  • Foreclosure form (available at the bank or lender’s website)
  • Cheque or demand draft for the foreclosure amount
  • How to avoid foreclosure charges on car loan?
  • To avoid foreclosure charges on your car loan, consider the following strategies:
  1. Read the loan agreement: Understand the terms and conditions regarding foreclosure charges before signing.
  1. Negotiate with the lender: Sometimes, lenders may waive the charges, especially if you have a good repayment history.
  1. Make regular payments: Avoid falling into overdue situations by making timely EMI payments. For more details, refer to overdue payment.
  1. Wait for the penalty-free period: Some loans have a period after which no foreclosure charges are applicable. Plan your closure accordingly.


 Bajaj Finserv App for All Your Financial Needs and Goals

Trusted by 50 million+ customers in India, Bajaj Finserv App is a one-stop solution for all your financial needs and goals.

You can use the Bajaj Finserv App to:

  • Apply for loans online, such as Instant Personal Loan, Home Loan, Business Loan, Gold Loan, and more.
  • Explore and apply for co-branded credit cards online.
  • Invest in fixed deposits and mutual funds on the app.
  • Choose from multiple insurance for your health, motor and even pocket insurance, from various insurance providers.
  • Pay and manage your bills and recharges using the BBPS platform. Use Bajaj Pay and Bajaj Wallet for quick and simple money transfers and transactions.
  • Apply for Insta EMI Card and get a pre-approved limit on the app. Explore over 1 million products on the app that can be purchased from a partner store on Easy EMIs.
  • Shop from over 100+ brand partners that offer a diverse range of products and services.
  • Use specialised tools like EMI calculators, SIP Calculators.
  • Check your credit score, download loan statements and even get quick customer support—all on the app.

Download the Bajaj Finserv App today and experience the convenience of managing your finances on one app.

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While care is taken to update the information, products, and services included in or available on our website and related platforms/websites, there may be inadvertent inaccuracies or typographical errors or delays in updating the information. The material contained in this site, and on associated web pages, is for reference and general information purpose and the details mentioned in the respective product/service document shall prevail in case of any inconsistency. Subscribers and users should seek professional advice before acting on the basis of the information contained herein. Please take an informed decision with respect to any product or service after going through the relevant product/service document and applicable terms and conditions. In case any inconsistencies observed, please click on reach us.

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Frequently asked questions

Is it mandatory to pay foreclosure charges on car loan?
Yes, most lenders require borrowers to pay foreclosure charges if they wish to repay their car loan before the end of the loan tenure. These charges compensate the lender for the loss of interest income that would have been earned over the remaining loan period. The specific foreclosure fee varies by lender and loan agreement, so it is important to review your loan documents for detailed information.

What to do if you are asked to pay car loan foreclosure charges?
If you are asked to pay car loan foreclosure charges, first review your loan agreement to understand the terms and conditions. Contact your lender to discuss the charges and inquire if there are any options to reduce or waive them. Ensure that you have all necessary documents, such as your loan account number and identity proof, when making the payment. You can pay the charges either online through your lender’s portal or offline at a branch.

Can loan foreclosure fees be waived?
In some cases, loan foreclosure fees can be waived, but this depends on the lender’s policies and your repayment history. It is advisable to negotiate with your lender, especially if you have a good repayment track record. Some lenders may offer waivers or reduced fees as a goodwill gesture to retain customer loyalty or under special circumstances.

Can a car loan be paid in advance?
Yes, a car loan can be paid in advance, allowing you to clear the outstanding balance before the scheduled end of the loan tenure. This can help you save on interest costs and become debt-free sooner. However, it is important to check if there are any foreclosure charges associated with early repayment. Paying in advance demonstrates financial discipline and can positively impact your credit score.

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