[sumukha]

Originally Posted by Rahul Bhalgat

In case of foreclosure, you need to pay only the outstanding principal. Since you do not use the outstanding principal after this, why would you pay interest? The foreclosure charges will be part of contract and hence you need to pay the same.

If the loan is from Banks, they would calculate the interest on daily/monthly summation basis and the EMI is arrived on the basis on Principal+interest . As such you would have paid the interest on the outstanding amount as well as on the due date of EMI. In case of foreclosure, you need to pay the outstanding principle and the proportionate interest upto the date of closure from the date of last EMI paid plus fore closure penalty if there is any as per the contract.

But the procedure will be different in case of NBFC'S.