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The EMIs for my car loan from Axis Bank were automatically deducted through ECS from my ICICI Bank account. Recently, when I pre-closed this loan, the staff at Axis Bank asked me to additionally issue a stop payment for the EMIs through ICICI Bank. It’s just a precautionary measure, they said, and isn’t really required especially if you pre-close the loan well in advance of the next EMI. But, in my opinion, it’s better to be safe by taking this measure. All you need to do is to visit the branch, fill up a form, and submit it.
And, if you don’t issue a stop payment, what’s the worst thing that can happen? An extra EMI would be deducted but this would be credited back to you after some time — you wouldn’t have access to these funds in the interim. Another often suggested solution is to reduce your account balance to zero, but this might not be feasible for everyone and especially for someone like me who likes to maintain a single source of truth.
Tip Tuesdays is my initiative to share practical personal finance tips — every Tuesday. I’d be delighted if you could share a tip or two from your own experiences. Drop a comment to submit your tip. And, as always, do spread the word if you find this useful.
Thanks for reading this article. I'd love to hear your opinion. Please use the comments section below to share your thoughts. I frequently write new articles that also cover several other aspects of personal finance including credit cards, financial goals, health insurance, income tax, life insurance, mutual funds, retirement planning, and much more. You can Subscribe through Email and receive new articles directly in your Inbox or you can Subscribe through the RSS Feed and receive new articles in your feed reader.