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Instant loan apps have made everything from the approval to the disbursement process simple. However, there may be situations where you might consider personal loan cancellation after disbursement. It’s important to know that once the loan amount is disbursed, reversing the transaction can be complex and might incur additional costs.
Cancelling a personal loan after disbursement is not as straightforward as cancelling before disbursement. This is because the funds have already been transferred to your account, and the lender has initiated the loan agreement. Therefore, how to cancel a personal loan after disbursement becomes a very pressing question when you’re faced with unforeseen circumstances.
Before deciding to cancel your quick personal loan online, consider the following:
Timing: Whether you can cancel your loan or not largely depends on the stage of the loan process. Cancelling before disbursement is generally easier. However, once the loan has been disbursed, the process becomes more complex and may require repayment of the loan amount along with any accrued interest.
Fees and Penalties: Understand the costs associated with cancelling the loan. Personal loan cancellation after disbursement may involve prepayment penalties and processing fees, which can add to the overall cost of the loan. It’s important to review your loan agreement for details on these charges before making a decision.
Impact on Credit Score: Cancelling a loan can affect your credit score, especially if the process involves closing an account that was already opened. This can impact your ability to secure loans in the future and may result in higher interest rates. Therefore, it’s crucial to consider the long-term implications of loan cancellation on your credit health.
Cancelling a personal loan can have several implications that can affect you:
Financial Costs: Can you cancel an approved loan without incurring costs? Typically, lenders charge a fee for personal loan cancellation, which can be a percentage of the outstanding loan amount. Additionally, if the loan has been disbursed, you may be responsible for repaying the principal amount along with any accrued interest.
Alternative Arrangements: If you’re cancelling the loan due to a better offer, ensure that the new loan is more beneficial after considering all associated costs and terms. Compare the interest rates, fees, and repayment terms of both loans to make an informed decision. It’s also important to communicate with your current lender to understand the cancellation process and any potential consequences.
Credit Score Impact: Can I cancel my personal loan after approval without affecting my credit score? Cancelling a loan after approval can lead to a temporary dip in your credit score due to the hard inquiry and the closing of a credit account. This can affect your ability to obtain favourable loan terms in the future.
If you’re contemplating whether can I cancel my personal loan after approval or even how to cancel personal loan after disbursement, follow these steps:
Review Your Loan Agreement: Thoroughly examine your loan agreement to understand the terms and conditions related to cancellation.
Contact Your Lender: Reach out to your lender for further enquiry. It’s crucial to communicate this promptly, especially if the loan has not been disbursed yet.
Submit a Formal Cancellation Request: Provide a written request for loan cancellation to your lender, clearly stating your reason for cancellation. Ensure that your request addresses the specific query, such as can you cancel an approved loan.
Settle Any Outstanding Amount: If the loan has already been disbursed, you may need to repay the disbursed amount along with any accrued interest. Confirm the exact amount with your lender and understand the implications of personal loan cancellation.
Obtain Confirmation of Cancellation: Ensure that you receive a formal confirmation of loan cancellation from your lender. This confirmation should clearly state that your personal loan has been successfully cancelled. You should also receive complete details about any fees charged along with the final settlement amount(if applicable).
Also Read: Personal Loan Disbursement Process – How it Works?
When cancelling a personal loan after approval, be prepared for the following fees and charges:
Prepayment Penalty: Most instant loan providers charge a prepayment penalty for early repayment of the loan. For example, if you have taken a personal loan up to 50000 and decide to cancel it after disbursement, you may be charged a penalty based on a percentage of the outstanding principal amount. This can significantly increase the cost of cancellation.
Processing Fee: The processing fee paid at the time of loan application may not be refundable upon cancellation. This fee is an important consideration when determining how to cancel a personal loan application.
Interest Charges: If the loan has been disbursed, you may be required to pay interest for the period the loan amount was in your possession. This is a crucial factor in personal loan cancellation after disbursement.
In the short term, loan cancellation can lead to a slight dip in your credit score. This is because the loan application process involves a hard inquiry, which can temporarily lower your score. Additionally, if the loan was disbursed and then repaid immediately, it might be viewed as a credit utilisation event.
In the long run, the impact of cancellation on your credit score depends on how well you manage your finances post-cancellation. If you cancel your personal loan and then take out another loan or credit product, your credit score might be affected by the new application and any subsequent borrowing. However, if you manage your finances responsibly and avoid taking on unnecessary debt, your credit score can recover and even improve credit score over time.
Before opting for personal loan cancellation, consider these alternatives:
Discuss with your lender the possibility of restructuring your loan terms. This could involve extending the repayment period, reducing the interest rate, or adjusting the loan amount to better suit your financial situation.
If you find a lender offering lower interest rates on loan, consider transferring your existing loan balance to the new lender. This can help you save on interest payments and potentially reduce your monthly instalments.
If you have excess funds, you can make a partial repayment to reduce your loan balance and interest burden. This option can be more cost-effective than cancelling the entire loan.
Also Read: What is Personal Loan Repayment and Types of Loan Repayment Methods?
While cancelling a personal loan after approval is possible, it’s important to carefully consider the potential consequences, including fees and the impact on your credit score. Exploring alternatives like loan restructuring or balance transfer can provide more financially prudent solutions. Always communicate clearly with your lender and ensure you understand the terms and conditions before making a decision.
Yes, you can cancel a personal loan after approval. But it is advisable to do so before disbursement to avoid additional fees. Check your loan agreement for any specific cancellation terms and conditions.
Cancelling a loan after approval can affect your credit score temporarily due to the hard inquiry from the loan application. However, the impact is usually minor and short-lived.
This completely depends on your loan agreement and the terms set by your lender.
If you cancel an approved loan, you may be subject to cancellation fees, and the loan application’s hard inquiry can temporarily impact your credit score.
You can cancel the loan after processing, but it’s best to do so before disbursement to minimise any potential fees and charges.
You can close a personal loan immediately after disbursement but be prepared for possible prepayment penalties and other associated charges.
Yes, you can cancel a loan if your financial needs change. Communicate with your lender as soon as possible to discuss cancellation or adjustment of the loan amount.
If you find a more favourable loan offer, you can cancel your existing loan. However, consider any cancellation fees and the impact on your credit score before proceeding.
While cancelling a personal loan can temporarily impact your credit score, responsible financial behaviour and timely payments on other credit obligations can help maintain your future loan eligibility.