Finance

ELSS mutual funds have grabbed the eyeballs of retail investors in the past few decades. Equity-Linked Savings Scheme, commonly known as ELSS are mandated by the Indian mutual funds’ regulator – Securities and Exchange Board of India (SEBI) to invest a minimum of 80% of their assets in equity and equity-linked securities. Owing to this rising popularity of ELSS funds, retails investors are often left wondering if they should succumb to this growing trend of ELSS tax saving mutual funds or invest in other investment options. If you are one such investor, we aim to offer the benefits and drawbacks of investing in ELSS funds in this article, which might help you with your investment decisions.

Benefits of investing in ELSS funds

Following are some of the benefits of investing in ELSS funds:

1. Helps to save tax
   ELSS funds are commonly known as tax saver mutual funds as these mutual funds help investors to reduce their tax outgo by offering a tax deduction under Section 80C of the IT Act, 1961 of up to Rs 1.5 lacs per annum. An investor can save up to Rs 46,800 by investing in Section 80C investments provided that they are belonging to the highest tax slabs. What’s more, ELSS funds are the only type of mutual funds that offer tax deductions and tax benefits to investors.
   
   
2. Lowest lock-in period
   Before you invest in tax-saving investments, you must be wary of the lock-in duration associated with that particular type of investment. ELSS funds enjoy the lowest lock-in period against other Section 80C tax-saving investments at just three years. Other tax-saving investments have a lock-in duration anywhere from 5 years to 15 years.
   
   
3. Helps to earn substantial returns

ELSS mutual funds not only helps to save tax, but also helps to earn substantial returns on their investments. This is due to the fact that these tax saver mutual funds allot a majority of their assets (at least 80%) towards equity investments, offering higher potential for substantial returns. This is why these tax saver mutual funds are believed to provide dual benefits to investors (tax benefits and capital appreciation).

• Lower tax on capital gains
  As ELSS funds have a mandatory lock-in duration of three years, capital gains earned on ELSS investments are classified as long-term investments. LTCG or long-term capital gains are taxed at 10% per annum for gains above Rs 1 lac* as opposed to STCG (short-term capital gains) which are taxed at 15% per annum.

Drawbacks of investing in ELSS funds

One of the biggest drawbacks of investing in ELSS mutual funds is that the tax deduction of up to Rs 1.5 lac per annum are not subject to just Section 80C investments. In simple terms, the tax deduction of up to Rs 1.5 lac is cumulative tax deduction for Section 80CCC and Section 80CCD as well.

An investor can invest in ELSS through lumpsum mode of investment or SIP investment. Irrespective of the mode of investment you choose to invest in ELSS funds, make sure that the objectives of the ELSS funds are in line with your financial objectives, risk appetite, and investment horizon. Happy investing!

*Long-term capital gains on equity funds of up to Rs 1 lac per annum are exempt from paying taxes.

When you are an investor, you are always on the lookout for lucrative schemes which can help you grow your wealth. While mutual fund investments are always subject to market risks, these can help you to grow your wealth better than many other kinds of instruments, like fixed deposits, deposit certificates, etc.

What is a fund of funds?

A fund of funds can be defined as a scheme in mutual funds, where the money of this kind of fund is utilised to invest in hedge funds as well as other mutual funds available in the market. While conventional mutual funds invest in a range of stocks of different companies, funds of funds invest in a range of different mutual funds.

Here are the different types of fund of funds:

● Gold funds: All the investments in this kind of fund of funds mutual funds are primarily related to gold schemes. You will also find some investment portfolios that have an Exchange Traded Fund (ETF), which invests in gold-related schemes.

● Asset allocation funds: These funds believe in portfolio differentiation and diversification, as they invest in multiple instruments like shares, debentures, etc. One can expect higher returns with minimal risk in these funds.

● ETF funds of Funds: These funds primarily invest in different kinds of ETFs and you do not need a demat account to invest in ETFs through this mode. However, these funds carry a slightly higher risk because ETFs, like shares, are traded in the stock market.

There are other kinds of funds as well, like multi-manager funds of funds, and international funds of funds.

Advantages of funds of funds:

• Since these funds invest in different mutual funds, the risk is minimal and there is a lot of diversity in the fund. While mutual funds are diverse in nature with minimal risk, funds of funds are even more diverse due to their direct investment in mutual funds in India.
• Experienced fund managers who have the expertise and bandwidth to analyse and predict market movements manage these funds.
• This is available for all types of investors, and anyone can invest in funds of funds.

Disadvantages of funds of funds:

• Like all mutual fund investments, you need to pay taxes on funds of funds, but the dividend income is exempted from taxation.
• The expense ratio is slightly higher than mutual funds since it requires a more hands-on approach to managing the funds.

The bottom line

If you are willing to consider funds of funds, you can easily do so online after assessing different plans and schemes. Also, if you keep this article in mind, you will find it easier when making your investment in the best fund of funds. However, ensure that you read up on the mutual funds that the funds of funds are investing in and what their objective is before investing your money.

Buying a house is an expensive affair, and this is one of the biggest financial hurdles that an individual has to face. The funds required to buy a house can usually not be relied upon solely on savings. This is where applying for a home loan can help. A home loan provides the financial support needed to make a property purchase. Now, there are various home loan plans that lenders offer. But before you apply for home loan, it is important to first be aware of the eligibility criteria set by lenders for these home loans. 

Financial institutions consider various factors while setting the home loan eligibility criteria. These factors include an applicant’s monthly income, age, employment status, CIBIL score, and so on. To make it easier, it is better to make use of a home loan eligibility calculator. This calculator will help in displaying a loan amount that you can be eligible for. By using this, you can effectively avoid getting your loan application rejected by the lender. 

Role of a Home Loan Eligibility Calculator

Getting too many loan applications rejected is never a good thing as lenders view this as a negative sign. There are applicants who get rejected simply because they are not aware of a lender’s eligibility criteria. This is where a home loan eligibility calculator is useful. The role of this calculator is to help borrowers know the loan amount that they are eligible for based on their profile. If the displayed loan amount is satisfactory, you can go ahead and apply for the loan. If not, keep searching for other plans until you find one that is suitable.  

How to use this calculator?

First, start by filling up your date of birth and city of residence. Once this is done, the next step is to fill up information with regards to your net monthly income, additional sources of income (if any), monthly instalments of any other existing loans, monthly expenses, as well as the repayment tenure of the home loan. After this, the housing loan eligibility calculator will display the loan amount that can be approved by the lender based on the information that you provided. 

Buying a house is most probably going to be the biggest expense of your life. This is why it is of the utmost importance that you are aware of the loan amount a lender will agree to offer. This is because you need to be prepared with the finances to cover the rest of the amount required for the property purchase from your savings. 

It is common for borrowers to mainly focus on the EMI payments of their home loans. While this is definitely something that needs to be thought about carefully, it is equally important to first be aware of the lender’s eligibility criteria. Do note that the housing loan eligibility criteria could differ from lender to lender, which is why it is important to check with your lender about their specific criteria. 

The journey to wealth creation is not an easy one. One needs to have patience, remain consistent with their investments, and also have a long term investment horizon. Also, financial planning is necessary since you will have to manage all your recurring expenses regularly and also ensure that you save and invest a dedicated portion of your monthly income in a lucrative scheme. 

One way to create wealth over the long term is by investing in market linked schemes like equity mutual funds. Today, we are going to discuss equity funds and the different categories which investors can consider for diversification.

What is an equity mutual fund?

An equity mutual fund is one of the most sought after mutual fund schemes in India with an AUM surmounting billions of rupees. These are market linked schemes that invest the majority of their investible corpus in equity and equity related instruments of companies publicly listed in India. As per market regulator SEBI guidelines, an equity mutual fund must invest a minimum of 80 percent of its total assets in equity and equity related instruments. Depending on the nature of the scheme and its investment objective, the fund manager may allocate the remaining 20 percent to fixed income securities. The investment objective of most debt funds is to create long term wealth. These funds have maximum exposure to the equity market making them the mutual fund scheme with the highest amount of investment risk. Although there are greater risks involved, in the long run equity mutual funds have outperformed every other conventional scheme in the past. They have the potential to offer risk adjusted returns and offer diversification by investing in a basket of stocks with growth potential.

Equity mutual fund categories

Equity mutual funds can be categorized based on the market cap they choose to dominate. If you take market capitalization into consideration, equity funds can be classified as –

Large Cap Funds – Also referred to as ‘blue chip’ funds, these funds invest in stocks of companies with large market capitalization.

Small Cap Funds – Small cap funds predominantly invest in equity and equity related instruments of small cap companies with an annual turnover of Rs. 500 crores or less.

Mid Cap Funds – Mid cap funds invest in mid cap company stocks.

Multi Cap Funds – Multi cap funds invest across market capitalization. As per SEBI mandate, these funds must have a minimum exposure of 25 percent each to mid cap, small cap, and large cap company stocks.

Flexi Cap Funds – Flexi cap funds must invest a minimum of 65 percent of their total assets in mid cap, small cap, and large cap stocks with no mandate of having a minimum exposure to either of the market caps.

Save tax with ELSS

Equity Linked Savings Scheme or ELSS is an equity scheme that comes with a tax benefit. ELSS is the only mutual fund scheme that comes under Section 80C of the Indian Income Tax Act, 1961 where investors can invest up to Rs. 1.5 lacs per fiscal year and bring down their tax liability.

Invest in foreign markets with international funds

International mutual funds invest in equity and equity related instruments of companies listed outside India. They offer diversification globally unlike other equity funds that only invest in the domestic equity markets.

Sector/Theme based equity funs

There are certain equity funds that only invest in stocks of companies sharing a common theme or belonging to the same sector as pharma, petroleum, natural gas, etc. These funds are referred to as sectoral/thematic funds.

If you are unsure about equity funds, talk to your financial advisor to make an informed investment decision.

If investing in debt mutual funds is in your financial planning, then you need to have a basic understanding of how debt funds work and a few things about these fixed income oriented schemes before investing.

The three most basic things to keep in mind when investing in debt funds is the entity borrowing the money, the tenure of the loaned amount, and the potential returns which one can earn from investing in that debt fund.

The entity borrowing the sum – Assessing the creditworthiness of the entity borrower is necessary so that investors have a clear idea of whether the entity borrowing the sum has the ability to repay within the pre-defined tenure. To understand the credibility of the borrower, they are given credit ratings such as AAA, AAA+, etc. which gives people a fair idea about their worth. The higher the credit score, the more reliable the creditor is in terms of repaying the debt.

The loan duration – Now if and when you take a loan from a bank, it makes it mandatory that you return the amount in EMI or lumpsum before a fixed duration. Similarly, investors must be aware when the creditor is going to repay the money in whose issued bonds have been invested. The date of maturity must be clear as investors have every right to know on which date the borrower will be repaying the money loaned from them.

Understanding potential returns – If and when you are investing in a conventional fixed income instrument, the first thing that you check is the interest rate that the scheme is offering. Then why not do the same when investing in debt funds? You may know for a fact that debt mutual funds predominantly invest in fixed income securities and money market instruments to generate returns. However, debt funds do not guarantee returns. Having said that, the returns from debt funds are not guaranteed but based on their past performance, investors should be able to get a fair idea about the kind of returns that particular debt scheme is offering.

Investors consider debt funds either for diversification or because they do not want to expose their finances to the dangers of volatile equity markets. Debt fund investors are always concerned about their invested capital but at the same time, they too expect some returns from their investments.

Types of debt funds

Market regulator SEBI currently has 16 different product categories under debt funds. They are –

1. Liquid Fund
2. Overnight Fund
3. Money Market Fund
4. Gilt Fund
5. Long Duration Fund
6. Floater Fund
7. Ultra Short Fund
8. Medium Duration Fund
9. Credit Risk Fund
10. Dynamic Bond Fund
11. Medium to Long Duration Fund
12. Corporate Bond Fund
13. Banking and PSU Fund
14. Gilt Fund with 10 year constant Duration
15. Short Duration Fund
16. Low Duration Fund

Debt funds offer liquidity which other mutual schemes like ELSS (Equity Linked Savings Scheme) lack. A mutual fund portfolio must have liquidity so that the investor is able to immediately redeem some of their investments in case of a financial emergency. Also, returns from debt funds remain unaffected by the upheavals in the stock market and they try to generate stable returns while protecting the investor’s capital. Depending on your investment horizon and income needs, you can either consider debt funds with low maturity duration, short term maturity, or those whose portfolio matures over the long term. Also, investors can start a SIP in debt funds to ensure that they save and invest a fixed sum periodically.

Mutual funds may allow investors to target long term financial goals like wealth creation or building a commendable retirement corpus, securing children’s financial future, etc. The best thing about mutual funds is that you do not have to invest all your investment right at the beginning of the investment cycle. All you have to do is start a Systematic Investment Plan through which you can invest small fixed sums systematically at fixed intervals till your investment objective is accomplished.

If you have a very high risk appetite and wish to invest in a portfolio of securities spread across market capitalization you can consider investing in multi-cap funds.

What is a multi-cap fund?

Equity mutual funds can be categorized based on the market capitalization which they tap into for constructing a diversified portfolio. While equity schemes like large cap, mid cap, and small cap invest in stocks of companies with large, medium, and small market capitalization respectively, a multi cap fund is an open ended scheme that diversifies its portfolio across market capitalization.

Market regulator SEBI mandates a multi cap fund to invest a minimum of 25 percent each of its total corpus in small cap, mid cap, and large cap stocks. Since the majority of the investment portfolio of a multi cap fund is exposed to the equity market, it is usually considered by investors to have very high risk tolerance.

What are the different types of multi-cap funds?

As per SEBI, there is no official sub-category for multi cap funds. However, they can be broadly classified as follows –

Large cap oriented – These multi-cap funds have more focus on large cap market and focus on bluechip stocks and then take other stocks from different market caps into consideration while constructing the portfolio.

Mid cap oriented – These multi-cap funds have more focus on the mid cap market and focus on mid cap stocks and then take other stocks from different large and small cap markets into consideration while constructing the portfolio.

Small cap oriented – These multi-cap funds have more focus on the small cap market and focus on small cap stocks and then take other stocks from mid and large cap markets into consideration while constructing the portfolio.

How to invest in a multi cap fund?

Investors can either choose the traditional way or the modern way to invest in multi cap funds. The traditional way to invest in a multi cap fund is to visit the AMC personally and fill out the KYC details and also the name of the scheme and the amount that you want to invest. If you wish to make a lumpsum investment then you need to invest the entire investment sum right at the beginning. If you wish to start a SIP then you need to fill in the SIP sum, the date of every month which you will be investing on and make sure that you manually visit the AMC every month to make the SIP investment.

The modern way to invest in a multi cap fund is by filling all the above mentioned details online by visiting AMC’s website. You can also invest online through an aggregator through their website or by any other platform made available (for example a mutual fund mobile app).

To remain invested for a longer duration consider starting a SIP in multi cap funds. Also, if you aren’t sure about how much exactly you need to invest via SIP to build the desirable corpus feel free to take the help of the online SIP calculator.

To build a rewarding mutual fund portfolio, it is important for investors to diversify their investments across markets and asset classes. Some of the most common assets which investors consider for diversification are equity, gold, debt, and real estate. What’s amazing is that even under each of these asset classes, there are further possibilities to mitigate the overall investment risk by investing in different subcategories. Under the equity gamut, one way to minimize investment risk is investing in market linked schemes like equity funds that invest in a basket of securities of companies belonging to various sectors and industries.

While most equity funds are actively managed, index funds offer passive investing for those who want to invest in a scheme whose portfolio is void of biased human involvement. Let us find out more about index funds and whether they are ideal for your financial goals.

What is an index fund?

An index fund is a mutual fund scheme that invests in stocks belonging to a specific index. The index fund is designed to replicate the performance of the securities of its underlying benchmark while generating returns. While active funds try to outperform their benchmark, index funds try to generate returns similar to their benchmark.

Important things to know about index funds

How do index funds work?

Index funds only invest in stocks belonging to a particular index like the NIFTY 50 or SENSEX 30. So, if an index fund invests in SENSEX 30 index, it will try to replicate the performance of these 30 stocks the way they have performed at the index. This way, the index fund has minimum human involvement, and the returns are free from human errors too.

Index funds have a low expense ratio

By now we have established the fact that index funds try to generate returns similar to the stocks of their underlying index/benchmark. This is different from the active style of mutual fund investing where the fund manager is involved in actively buying and selling securities from the scheme’s portfolio and ensures that he maintains a well-diversified portfolio. Since other mutual funds have active involvement from the management end, they have a high expense ratio as opposed to passive funds like index funds that have a low expense ratio.

Ideal for passive investors

Not all investors want their portfolios to be actively managed by fund managers. In fact, some investors are not sure about the fund manager’s ability to generate returns from lucrative market conditions. Such investors who do not wish their portfolios to be reshuffled from time to time can consider investing in index funds. Index funds follow a passive investment strategy and although they too have a dedicated fund manager, he/she has very little say in how the fund generates returns from time to time.

Ideal for investors with a long term investment time horizon

Since index funds are mutual fund schemes that heavily invest in the equity market, one cannot expect them to generate returns every day. Investors need to have patience and give their investment a minimum time of 3 to 5 years so that the scheme is able to perform to its fullest potential. Since the stock market is highly volatile in nature, investors can even witness negative returns in the short run, however, in the long run, they might be able to generate a commendable corpus is they continue their investment journey in a disciplined manner throughout the investment horizon.

Mutual funds have been the go-to option for investors when it comes to multiplying their wealth. It is so because mutual funds are one of the best options as they offer a range of benefits and satisfy the needs of investors irrespective of their risk appetite or investment goal. The concept of investment has become more convenient now due to digitalization. You don’t have to go to any branch personally since you can invest in mutual funds online now without contacting any broker. In this article, we will tell you how you can invest in mutual funds online in detail. 

How to invest in mutual funds online

There are several types of mutual funds in India in which you can invest such as equity mutual funds, liquid mutual funds, debt mutual funds, fixed maturity funds, tax saving mutual funds or also known as ELSS, retirement funds, etc. You can invest in any of the investment plans depending upon your requirement such as your budget, net worth which can be calculated using a net worth calculatoronline, financial goals, etc. There is always an option of offline investment in which you can visit the branch, submit the required documents, and complete the entire process with the help of professionals but let’s understand the process of investing online in mutual funds- 

Step 1: Registration- You need to visit the fund website. If you are a first-time investor, you will have to register yourself by providing details such as name, mobile number, date of birth, PAN card details, and email. Then you need to complete the KYC or Know your customer process in either of the three ways, i.e. online by uploading the scanned images of the required documents, or via OTP, or the biometric option. If you are not a first-time investor, you just need to log in to the website. 

Step 2: Personal details- In this step, you need to provide your personal details such as profession, nationality, taxpayer in any other country, and annual income. You have the option to add an applicant in this step which is completely optional. Then you need to accept the term and conditions by clicking on the option. 

Step 3: Nominee details- As the name suggests, you need to furnish the details regarding the nominee. You will come across areas such as name, percentage of allocation for the nominee, date of birth, title, and nominee’s address. This is an optional step. If you don’t wish to appoint a nominee you can skip this step. 

Step 4: Bank details- This step requires you to provide bank details such as account number, IFSC code, and type of account. You need to tick the box which confirms that the redemption and investment will be carried out through the particular account you have mentioned in the step. Then proceed further. 

Step 5- Investment details- In this step, you will need to select the type of investment, scheme and plan in which you need to click on the “directly” option since it’s an online process. You can choose from equity, hybrid, debt, and others for scheme details. Then, choose the SIP period, frequency of payment, number of instalments, and amount. You can then make the payment using the preferred option to successfully invest online. 

Conclusion

Before you decide to invest online or offline, make sure you have a clear idea of what you are doing. Choose the right plan and scheme that pertains to your individual requirements. If you choose the right option, it will benefit your financial goals. Moreover, online investment is a hassle-free and easy process. Prepare the required documents and start investing online. 

In today’s society, the word commodity trade is essential for investors and those looking to make money.

A commodity is defined as any basic good used by people or businesses to buy or sell. Commodities help form the backbone of modern life and have been traded for thousands of years. Some key examples are cotton, gold, oil, maize, coffee beans, etc.; all these goods are traded extensively worldwide every day.

The definition of what makes up a commodity market has changed over time. Still, it is generally accepted that there are three different types: agricultural products, energy products, and metals.

What is the Commodity You Want to Trade

Before selecting a commodity,an investor must understand what they are looking to invest in. Most commodities can be traded as either futures or as options, which should be considered when thinking about your investment strategy. For example, an investor looking for regular small returns might want to trade as a futures contract. On the other hand, investors looking to make one significant return from their investment may benefit from trading as an option. There are many details associated with this decision, and if you choose incorrectly, you could lose all your money.

Find Out More About the Market

One of the best ways to learn about a commodity, its characteristics, and its trade is by signing up with a trading platform such as Saxo.

Customers who sign-up will have access to research reports, educational material, and tools such as live price updates and historical data to keep track of how their investments are performing.

For example, if you are looking to trade crude oil, all the potential investors need to know is that it is heavily traded in both New York and London, which are two of the world’s largest commodity markets.

Choose Where to Trade

Many factors determine where an investor decides to trade a particular commodity. For example, traders should think about what instruments they want to trade, and the trading platform best suits their investment profile.

In terms of specific markets, three leading exchanges in the UK offer physical delivery of commodities: ICE Futures, The London Metal Exchange (LME), and Lloyds Market. Whereas other markets such as Eurex only offer derivative products such as futures contracts or options contracts.

Open an Account

This step is essential before trading any financial product, primarily when investing in commodities is concerned.

Customers who sign-up with brokerages will have access to accounts fully regulated by financial conduct authorities in the UK and the FCA (Financial Conduct Authority). Different types of accounts are available depending on how much an investor is looking to deposit and what type of trading experience the customer has.

Market Research

After opening an account, investors can begin looking at strategies and considering market conditions for eventually trading their chosen commodity. If in doubt about where in the market cycle we currently sit, it’s easy to conduct a simple online search using factors such as ‘commodity prices’ or ‘commodities price charts. This will give customers up-to-date information, which is essential before any investment strategy is considered.

Investing in commodities isn’t for everyone, but if you have any interest in financial markets, then learning about these relatively simple products could be your key to becoming a more successful and profitable trader.

In Conclusion

The commodity market can be highly lucrative for customers who know what they are doing, and novices must do plenty of research before committing any capital to such an unpredictable, volatile market. Commodities can be traded as futures or options, which should be considered when thinking about your investment strategy. With the right tools and market knowledge, commodity trading could be an excellent way for UK investors to increase their portfolio’s performance.

Personal Loans are one of the simplest and most convenient sources of finance available. Being unsecured loans and perceived to be riskier, the personal loan interest rates are higher than other retail loans available. These are popular as the end use of finance is not insisted upon—you can utilise these loans for varied purposes like travel, gold purchase, business or medical treatment.

Before applying for personal loans, doing a comparative analysis on the options available in the market, based on personal loan interest rates, and using personal loan emi calculators, will enable informed decision-making. Another important factor that can affect the choice of lenders is the pre-closure charges.

Preclosure is when you choose to close your loan before the completion of the loan term. Some lenders, as a policy, have a pre-payment penalty ranging from  0.5 percent to 2 percent.

Types of personal loan closures

• Regular personal loan closures: This is the closure of the personal loan in the normal course, after completion of the loan term when all the EMIs have been paid. Once the loan is closed, the lender will give the Loan closure letter.

• Personal loan pre-closure: This is the closure of the loan anytime before the completion of its term. Pre-closure generally invites a foreclosure fee or penalty.  Some lenders have this penalty for pre closures done before completion of 12 months from the date of sanction.

• Personal loan part-payment: If the borrower intends to change the loan term or repayment amount, he can make a lump sum payment to have these changes affected. This will not close the loan, but change the EMIs on the terms decided by the lender and mutually agreed upon.

Personal loan Pre-closure Process

Though pre-closure of personal loans attracts a penalty, it is still advisable to pre-close the loan to lessen the interest burden. Here is the procedure to be followed for pre-closure:

• Once you decide to pre-close the loan, you need to visit the bank branch to initiate the process.
• You need to approach the branch from where the loan is availed.
• Once you approach the branch and make yourself acquainted with the process, you may need to submit a pre-closure form or application. This form needs to be carefully filled in and submitted.
• Along with this form, you need to submit the following documents:
• Pre-payment statement, requested from the lenders.
• Copy of your identification and address proof.
• The loan account statement, evidencing payment of EMIs.
• Finally, you submit a cheque or DD of the foreclosure amount.
• On submission of the cheque/DD along with documents, the lender gives an acknowledgement.
• Since the loan is unsecured, there is no collateral to be released, which saves time.
• The final closure letter is handed over to you after a few days, after the realisation of the closure amount.

Clearing personal loans before term boosts the credit score, and acts as a reinforcement of your credit management abilities apart from the general advantage of saving on interest and easing the debt burden.  Hence, it is strongly recommended to pre-close the personal loan in case you have surplus money.

To summarise, here are a few documents required to pre-close the lion:

• Loan documents.
• Copy of address proof and identification proof.
• Loan account statement evidencing timely credit of repayments.
• Cheque or DD of the loan closure amount

Once the loan is closed, the lender will provide you with the following documents:

• Payment acknowledgement.
• No objection certificate.
• Payment of obligation letter.
• Loan closure certificate.

Preclosing a personal loan is as hassle-free as applying for it. One needs to approach the branch with the necessary documents and have it closed.