Loan Closure Policy

1. Loan Recall/Cool-Off Policy

1.1 Timeframe

• Borrowers may recall (cancel) their loan by exercising the cooling-off option within 4 days of loan disbursement.
• • Example: If a loan is disbursed on January 1, 2023, recall is permitted until January 4, 2023.

1.2 Charges and Fees During Recall/Cool-Off

• Interest Charges-Interest will be calculated based on the applicable APR for the period the funds were utilized. However, LoanFront currently provides a 100% waiver on APR charges for loans recalled within the cooling-off period.
• Processing Fee Adjustment- LoanFront retains 4% of the processing fee plus applicable GST and refunds the balance amount to the customer. If the total processing fee charged at disbursal is less than or equal to 4%, no additional refund or discount is applicable.
• • Example- For a loan of ₹10,000 with a processing fee of ₹590 (inclusive of GST), disbursed on January 1, 2026 and recalled on January 2, 2026:
    • Principal: ₹10,000
    • Processing Fee Adjustment: Refund = ₹590 – ₹472 = ₹118
    • Total Amount Payable by Customer: ₹10,000 – ₹118 = ₹9,882 under Recall / Cool-Off Option

1.3 Loan Closure Restrictions

• If any EMI has already been paid, loan closure through loan recall is not permitted.
• Partial recall of the loan is not allowed. The entire loan must be paid in full.

2. Early Loan Closure Policy

A borrower may close the loan before the scheduled tenure by repaying the entire outstanding loan amount, including all applicable interest, charges, and preclosure fees. For the purpose of this policy, preclosure, early closure, and foreclosure carry the same meaning and follow the same rules.

2.1 Timeframe

• A loan is eligible for early closure after 4 days from the date of disbursement.
  • Example: If the loan is disbursed on 1 January 2024, it can be closed on or after 5 January 2024.

2.2 Loan Closure Restrictions

• Early Loan Closure is not permitted if only one EMI remains to be paid.

2.3 Preclosure Charges for Early Loan Closure

Preclosure charges depend on the age of the loan and are calculated as a percentage of the original tenure of the loan.

• LoanFront will charge 4% of the outstanding principal being foreclosed/preclosed as the Preclosure Fee, plus applicable GST.
• GST at 18% will be applied on the Preclosure Fee.

2.4 Representative Example

To preclose a loan with the following details:

• Principal: ₹10,000
• Interest Rate: 20% p.a.
• Loan Disbursed On: 1 January 2023
• Loan closure Date: 5 January 2023

Detailed Calculation

• Interest for 5 days: ₹10,000 × 20% × 5 / 365 = ₹27
• Preclosure Charges: 4% of ₹10,000 = ₹400
• GST on Preclosure Charges (18%): 18% of ₹400 = ₹72
• Total Amount Payable: ₹10,000 + ₹27 + ₹400 + ₹72 = ₹10,499

Thus, Total Amount Payable by Customer is ₹10,499 under Early Loan Closure/preclosure/Foreclosure Option.

3. Early EMI payment Policy

If the Borrower opts to prepay an EMI amount or make a Part-Prepayment (excluding foreclosure payments), a EMI Prepayment Fee will be charged. The amount chosen for prepayment must be at least equal to the principal component of one EMI.

3.1 Timeframe

• Borrowers may prepay a portion of the principal at any time before the scheduled due date.
• EMI prepayment is allowed only if made at least 7 days before the EMI due date.

3.2 Prepayment Restriction

• Payments made within 7 days of the EMI due date are not treated as prepayments and do not qualify for interest waiver.

3.3 Prepayment Charges

• For any instalment prepaid, Prepayment Charges of 4% plus applicable GST will be applied on the principal amount prepaid, after adjusting any due or overdue amounts.
• GST at 18% will be applied on the Prepayment charges.
• Any prepaid EMI amount cannot exceed the original EMI value as per the repayment schedule specified in the Key Fact Statement (KFS) of the Loan Agreement.

3.4 Representative Example

To preclose a loan with the following details:

• EMI Amount: ₹1130
  • Principal: ₹1000
  • Interest: ₹130
• Interest Rate: 20% p.a.
• EMI Due On: 1 May 2026
• EMI Prepayment Date: 2 January 2026

Detailed Calculation

• Prepaid days: ‘1 May 2025’ – ‘2 January 2026’ = 119 Days
• Interest benefit for 119 days: ₹1000 × 20% × 119 / 365 = ₹65
• Preclosure Charges: 4% of ₹1000 = ₹40
• GST on Preclosure Charges (18%): 18% of ₹40 = ₹7
• Total Amount Payable: ₹1130 - ₹65 + ₹40 + ₹7 = ₹1112