How to Write an Loan Closure Letter: Format and Sample Letters

People worldwide opt for loans for various needs. There are so many kinds of loans that banks provide, such as Home Loan, Personal Loan, Car Loan, Gold Loan, Loan against Property, etc. Before learning about a loan closure letter, one should know what a loan closure is.

When a person opts for any loan from any lender, they need to repay the loan within a fixed tenure via Equated Monthly Installments (EMIs). Other than this, they can also prepay or foreclose the loan amount before the pre-decided time period. So, when a person pays off all the outstanding balance of their loan, the loan gets closed. This is called a loan closure.

A loan closure letter is a formal letter written to the lender whenever you want to close your loan. It applies to all kinds of loans like personal loans, vehicle loans and home loans, etc. After closing the loan you are required to get a no-due certificate, which acts as proof that you have paid all the balance loan amount. This letter will be retained by the person as an official note that he/she owes nothing more to the lender/bank as far as the loan transaction is concerned.

Loan closure letter

Loan Closure Letter: Guidelines and Tips

The loan closure letter should be written following the format of a formal letter. As an official letter, the matter should be brief and to the point.
It is important to mention the correct date for the bank to note down your date. It also acts as proof that you have written to the lender on a particular date.
The subject should be precise and a single line telling the purpose of your letter.
Add a formal and respectful salutation for the receiver.
The main body should contain an introduction, the purpose of writing, and the bank details needed for the procedure.
Mention in the letter, if you have attached some verification documents in the end.
Senders should provide the contact details if needed for the process or in case of any query.
Proofread the letter before sending it.

Format of a Loan Closure Letter

Sender’s address

Date: (dd/mm/yyyy)

Receiver’s address

Subject:

Salutation

Body of the letter

Thank you.

Yours sincerely/faithfully/truly

Sender’s name

Contact details

Attachments: (if any)

Sample Letter 1 – Letter for Closure of Personal Loan

21 Nehru Layout

2nd Street

Ganapati Road

Chennai

15/02/2022

To,

The Branch Manager

State Bank of India

Main Branch

Sadhu Road

Chennai

Subject: Request Letter for Loan Closure

Dear Sir/Ma’am,

I am Sudarshan Dubey, and I have a personal loan in my account in your bank. I am writing this letter to request you to close my personal loan account with the number 19948383782885.

I have cleared all of my EMIs, and the loan tenure is complete. I am attaching all the mentioned documents, including the No Objection Certificate, Payment Receipts, Loan Sanction Documents, and a copy of my Aadhaar Card and PAN Card as per the requirements of the bank with this letter.

Kindly do the needful and let me know the further procedure for the closure of the loan. Please contact me on the number or email provided below in case of any queries. I would be grateful if you could do the process at the earliest.

Thank you.

Yours sincerely,

Sudarshan Dubey

Contact number: 929588394783

Email: Sudarshan@dubey

Attachments:

Loan A/c number
Loan payment receipts
No objection certificate (NOC)
Aadhar Card copy
PAN Card copy

Explore More Sample Letters

Sample Letter 2 – Letter for Closure of Home Loan

Apartment No. 134,

Krishna Apartments

Lakshmi Nagar

Mahanagar

Pune

17/05/2022

To,

The Branch Manager

Central Bank of India

West Branch

Roop road

Pune

Subject: Request for Home Loan Closure

Dear Sir/Ma’am,

I am Sudha Verma, a home loan account holder in your bank. I would like to bring to your notice that I have completed all the EMI payments for the loan, and thus would like to request for closure of my home loan account.

The actual tenure of my home loan with account number 174836839383 ends in August. As per the terms and conditions, I would have a minimum of a 3.5% prepayment penalty as I am closing the loan prior to the completion of the loan tenure. I am attaching all the mentioned documents, including the No Objection Certificate, Payment Receipts, Loan Sanction Documents, and a copy of my Aadhaar Card and PAN Card as per the requirements of the bank with this letter.

Thank you.

Yours faithfully,

Sudha Verma

Contact number: 748384637283

Email: sudha@verma

Attachments:

Loan A/c number
Loan payment receipts
No objection certificate (NOC)
Aadhar Card copy
PAN Card copy

FAQs about Loan Closure Letter

Question 1. What do you understand by loan closure?

Answer. When a person opts for any loan from any lender, they need to repay the loan within a fixed tenure via Equated Monthly Installments (EMIs). Other than this, they can also prepay or foreclose the loan amount before the pre-decided time period. So, when a person pays off all the outstanding balance of their loan, the loan gets closed. This is called a loan closure.

Question 2. What is a loan closure letter?

Answer. A loan closure letter is a formal letter written to the lender whenever you want to close your loan. It applies to all kinds of loans like personal loans, vehicle loans and home loans, etc.

Question 3. Is a no-due letter/certificate important after loan closure?

Answer. After closing the loan you are required to get a no-due certificate, which acts as proof that you have paid all the balance loan amount. This letter will be retained by the person as an official note that he/she owes nothing more to the lender/bank as far as the loan transaction is concerned.

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