How to Cancel a Personal Loan After Approval

A personal loan application is usually an efficient and user-friendly process, and this is especially true through a loan app. But what if after that, you find that you no longer want the loan? It is possible that your monetary need has already been met, or you may have found a borrowing option that suits you better. However, in certain conditions, a loan that has been given approval for can still be cancelled.

Knowing your rights and obligations as the borrower can be a good driving force in making the right choice that does not harm your credit rating and at the same time, you do not get into unnecessary trouble.

Can I Cancel a Personal Loan After It Has Been Approved?

Definitely, it is possible to cancel a personal loan even after it has been approved, though it largely depends on which stage of the disbursal process you are. In most cases, the lender will give you the option of cancellation if the loan amount has not yet been credited to your bank account. It is important however, that after the funds have been disbursed, a cancellation will not be possible, instead of that, you can do a pre-closure or early repayment and depending on the agreement, there may be the possibility of charges.

What matters here is to do so at the earliest possible time and to reach out to the lender in order to agree on the time of the disbursal.

Instances that are typically found where loans can be cancelled

• In case you have applied erroneously or if you have changed your mind.
• If you have got an interest rate that is more favourable from another lender.
• If the funds that were needed in the financial situation are no longer necessary.
• If the conditions were not properly understood or were ambiguous.

In any case, if you have not yet used the allocated money for any transaction, then cancellation may be an option that you will be able to use.

How to Cancel a Personal Loan

1. Immediately Get in Touch with the Lender: Following the approval of your loan, you will be notified either through a sanction letter or a notification. At this stage, communicate to the lender via a call or an e-mail the desire to cancel the loan. Logging in and checking if there is a cancellation request option before the disbursal is one of the ways to cancel a loan if you are using a loan app.
2. Confirm Loan Disbursal Status: If we find that the money has not yet been moved to your account, then you are still in a safe situation. Please get in touch with the lender and request them to keep the disbursal on hold and also cancel the agreement.
3. Submit a Written Request: In many cases, the lenders are in need of a written request from the borrower to carry out the cancellation of the loan. Make sure you put your application reference number, reason for cancellation, and your signature in the document. Send it by e-mail or submit it through the lender’s procedure.
4. Sign a Cancellation Form (If Applicable): In some instances, the lenders can require that the borrowers give their cancellation declaration, hence stating that they are cancelling the loan which was approved to them. A copy of the document signed by you should be kept in the files.
5. Keep a Confirmation Record: Once the cancellation is done, it is imperative that you get your cancellation in writing or issue a cancellation receipt to yourself. This way you will be safe in the event of any wrongful misunderstanding or if the system commits mistakes while making the auto-debit.

If the Loan Has Already Been Disbursed?

When the loan money has already been deposited in your account, cancellation is no longer an option — you opt for pre-closure instead. Along with any interest and the foreclosure fee, depending on the conditions, you will have to pay the full amount.

Here is what you need to do:

• Firstly, check your loan for pre-closure conditions
• Secondly, make the payment of the principal and any other fees as quickly as you can
• Finally, get a no-dues certificate as proof that the loan is fully closed

Do not forget, however, that some lenders stipulate a minimum lock-in period that must be adhered to before one may be allowed to pre-close a loan.

Does Cancelling a Loan Affect Your Credit Score?

Canceling a loan before the money has been given usually has no effect on your credit score. The lender might have done a credit check (hard pull) without your knowledge. However, one such check hardly changes your score.

Still, if you keep on frequently applying and cancelling, the lenders may consider you as an unethical person in the future and they may not give you a loan, especially if you are using a platform for loan apps where instant approvals are granted based on prior behavior.

Tips to Avoid Last-Minute Cancellations

• Please read all terms and conditions carefully before you press “Apply” on the platform.
• Use loan eligibility calculators to stay within the borrowing limit.
• Compare interest rates and tenure options beforehand.
• Apply only when you are absolutely sure to take the loan.

Most times, the last minute cancellations take place because people do not have the right information or they make a decision impulsively. The only thing that is needed to avoid such cases is preparation.

Conclusion

If you have already got your personal loan approved, you can still cancel it, but time is of the essence. You can ask for a cancellation with less hassle if the amount has not yet been disbursed. Otherwise, you will have to look for pre-closure options. In any case, whether you are applying through a bank or a loan app, always ascertain your need, affordability, and terms before signing the offer. Responsible borrowing begins with responsible decisions — even before the funds arrive in your account.