Personal loans amortise, so the interest you can still save depends on where you are in the tenure. Early in the loan, more future interest remains. Near the end, most of the expensive part may already be paid. That is why “my loan rate is 15%, so I should always foreclose” is incomplete.
Ask for the principal outstanding and generate the remaining amortisation schedule. Add all future interest from today to maturity. Then compare that amount with the foreclosure charge, taxes on applicable fees and any investment return you give up by using cash.
Example
If ₹3 lakh principal remains and future interest is only ₹22,000, paying a ₹10,000 foreclosure cost leaves at most ₹12,000 gross saving before considering liquidity. If the same ₹3 lakh has ₹70,000 of future interest, the case for closing is much stronger.
Part-payment can be the middle path
When the lender permits it, a large part-payment can reduce interest without draining all cash. Ask whether the lender recalculates EMI, tenure or both. If your monthly EMI is comfortable, keeping the EMI and shortening tenure generally produces more interest saving than reducing EMI.
Check where the closure money comes from
Do not foreclose a personal loan using credit-card cash or another higher-cost unsecured loan merely to say the first loan is closed. Refinancing is useful only when the new debt has a lower all-in cost and a disciplined repayment plan.
Protect the closure trail
After payment, save the foreclosure receipt, zero-balance statement and NOC. Watch the next bank mandate date to make sure an EMI is not debited after closure. Check your credit report later for closed status.
Decision rule
Foreclose when future interest avoided materially exceeds charges and the cash is genuinely surplus after emergency reserves. The correct comparison begins today, not on the day the loan was taken.