Car Loan Prepayment: Process, Charges, and Methods to Prepay a Car Loan

Car Loan pre-payment means paying off your Car Loan earlier than the agreed-upon term. This can be done either in full or partially through part pre-payment, providing borrowers with the flexibility to reduce their debt sooner.

Pre-paying a Car Loan can help reduce the overall interest cost, as interest is usually calculated on the outstanding principal. ICICI Bank is a preferred financier for Car Loans due to its customer-friendly approach. The Bank offers competitive interest rates, flexible repayment options and multiple pre-payment methods. Moreover, ICICI Bank’s transparent and minimal pre-payment charges make it an excellent choice for individuals looking to pay off their Car Loan early. With both online and offline methods to pre-pay, customers can choose the most convenient way to settle their dues without any hassles.

What Does Car Loan Pre-payment Mean?

Car Loan pre-payment refers to paying off the outstanding balance of your Car Loan before the completion of the loan tenure. Borrowers may choose to make full pre-payment, which involves paying off the entire loan amount in a lump sum or part pre-payment, where only a portion of the loan amount is paid.

Pre-payment can be done at any point during the loan term, but many borrowers prefer doing so after a few months or years, once they have the financial capability. By pre-paying the loan, the borrower reduces the principal on which interest is calculated, leading to a reduction in the overall interest cost. It also helps in reducing the financial burden as the loan is cleared earlier than expected.

ICICI Bank offers flexible pre-payment options, allowing customers to clear their Car Loans as and when they prefer. Whether it's a full settlement or a part payment, ICICI Bank ensures that its customers have multiple options to manage their loan repayments effectively. Pre-payment is particularly beneficial for customers whose income has increased or who have received a lump sum amount, such as a bonus, inheritance or the proceeds from a sale of property. By paying off the loan early, borrowers can save on future interest payments.

What are the Pre-payment Charges for Car Loans?

The pre-payment charges for ICICI Bank Car Loans vary based on the loan seasoning period and the type of pre-payment.

• Full Pre-payment (Foreclosure):

  • Within 12 months: 3% of the outstanding principal amount

  • Between 13 to 24 months: 2% of the outstanding principal amount

  • After 24 months: No pre-payment charges.

• Part Pre-payment:

  • Within 24 months: 3% of the part pre-payment amount

  • After 24 months: No part pre-payment charges.

Process for Pre-paying Your Car Loan with ICICI Bank

ICICI Bank has made the process of pre-paying your Car Loan convenient, whether you choose to do it online or offline. Here’s a step-by-step guide for how to go about it:

1. Check Loan Balance

Before proceeding with the pre-payment, borrowers should check the remaining loan balance, including any charges. This can be done by logging into the ICICI Bank website or iMobile, ICICI Bank’s mobile banking app. Alternatively, customers can visit any ICICI Bank Branch for the information.

2. Request Pre-payment

Once the balance is confirmed, the borrower can initiate the pre-payment request. For online processing, the borrower can log into theiraccount on ICICI Bank’s Internet Banking platform or iMobile and select the pre-payment option. For offline processing, a request can be made at any ICICI Bank Branch.

3. Provide Documentation

In some cases, depending on the loan’s seasoning period and the amount being prepaid, the Bank may ask for supporting documentation such as proof of identity, proof of income or a bank statement to confirm the source of funds for pre-payment.

4. Make Payment

The borrower can transfer the pre-payment amount directly into their Car Loan account. This can be done through the Bank’s online platform or via physical payment at the Branch. After the payment is processed, the Bank will issue a confirmation receipt.

5. Updated Loan Statement

After the payment has been made, the borrower will receive an updated loan statement reflecting the pre-payment and any changes to the outstanding balance or loan tenure. If the full loan is paid off, the loan account will be closed, and a No Dues Certificate (NOC) will be issued.

ICICI Bank’s customer-friendly approach ensures that the pre-payment process is smooth and easy, with minimal documentation and flexible payment options. By following these tips, borrowers can manage the pre-payment process in a way that minimises costs and allows them to save money in the long term.

Conclusion

Car Loan pre-payment offers a valuable opportunity to reduce your financial burden and save on interest. ICICI Bank’s simple and transparent pre-payment charges, along with its flexible loan options, make it an attractive choice for borrowers who wish to pay off their Car Loans early. By understanding the pre-payment process, charges and best practices, borrowers can make an informed decision that aligns with their financial goals. Whether you choose full or part pre-payment, ICICI Bank provides various options to suit your needs. To explore affordable Car Loan options and learn more about the pre-payment process, visit the ICICI Bank website or any ICICI Bank Branch today.