Closing a loan feels like a huge relief. No more EMIs, no more bank reminders, and complete ownership of your asset.
But what if, even after you close the loan, the bank still deducts an EMI from your account? This is more common than you think, especially with car loans, personal loans, and home loans where auto-debit instructions are active.
If your EMI has been wrongly deducted after loan closure, don’t panic. The money is recoverable, but you need to know the right process to get it back.
In this guide, we’ll break down why this happens, what steps to take immediately, and how to avoid it in the future.
Why Do Banks Deduct EMI After Loan Closure?
Even though the loan is officially closed, banks may still deduct an EMI due to certain technical or procedural reasons. Here’s why:
Auto-Debit (NACH/ECS) Not Cancelled: When you set up auto-debit, your account is linked with the bank or NBFC system.
Sometimes, even after loan closure, the ECS mandate isn’t cancelled in time. For example, you close your car loan on the 25th, but your EMI cycle is the 28th.
The bank’s system might still process the debit automatically.
Delay in Loan Closure Update: Even if you pay the final settlement, the bank’s backend systems might take a few days to reflect the “Closed” status.
So, if your EMI cycle falls within this delay, the deduction can still go through.
Pre-scheduled EMI Runs: Banks process EMIs in batches. If your closure happens just before the cycle, the deduction can still go through.
For instance, a personal loan EMI processed on the 5th might still be debited even though you closed the loan on the 3rd.
Post-Dated Cheque Issues: If you submitted post-dated cheques (PDCs), they may still be presented if you don’t collect them back from the lender.
Bank Error: While rare, human or technical errors can lead to an extra deduction even when everything is in order.
Your Step-by-Step Guide to Getting an EMI Refund
If a deduction has already happened, here’s exactly what you need to do to get your money back.
Step 1: Collect All Proof of Loan Closure
First, gather all your documents. You’ll need the loan closure letter, the No Dues Certificate (NOC), and the receipt of final settlement. Also, download the SMS or bank statement showing the EMI deduction as proof.
For example, if a ₹15,000 EMI was deducted after your NOC date, highlight both documents to show the discrepancy.
Step 2: Immediately Contact the Loan Provider
Call the customer care number or visit the nearest branch. Clearly state your loan number, closure date, and the date the EMI was wrongly deducted.
A simple script you can use is, “My car loan account 1234 was closed on July 15th. However, an EMI of ₹12,560 was deducted on August 5th. Please initiate a refund.”
Step 3: Submit a Written Refund Request
Always file a written request, either by email or a physical letter, so you have a tracking record.
In your request, ask for a clear timeline for the refund, which is typically 7 to 15 working days. Banks like HDFC and ICICI often process these refunds within 10 working days.
Step 4: Track Your Refund and Get Written Confirmation
Follow up if you don’t receive the refund within the promised timeline. Once the refund is processed, ask for the transaction ID to confirm the transfer.
What If the Bank Doesn’t Respond?
If you don’t get a timely response, escalate the issue to the bank’s grievance redressal officer.
You can find their details on the bank’s website.
If there’s still no action, you can file a formal complaint with the RBI Banking Ombudsman.
RBI’s CMS portal makes it easy to file complaints online against unfair deductions.
How to Avoid EMI Deduction After Loan Closure?
The best way to handle this issue is to prevent it from happening in the first place. Here’s what you can do:
Close Your Loan at Least 7-10 Days Before the EMI Date: This gives the bank’s system enough time to update and stop the auto-debit instruction.
Confirm ECS/NACH Deactivation: Explicitly ask for a written confirmation from your lender that your auto-debit mandate has been cancelled.
Collect Post-Dated Cheques: If you had provided PDCs, make sure you collect all of them back from the lender.
Monitor Your Bank Statement: Keep a close eye on your bank account for the next cycle or two to confirm that no EMI is being deducted.
Keep Your NOC & Closure Letter Safe: These are your legal proof in case of any future disputes.
Don’t Panic, Just Take the Right Steps
Having an EMI deducted after your loan closure can be frustrating, but it’s not a dead end.
Most of the time, it’s just a small delay in system updates or a simple oversight.
What matters is that you act quickly, document everything, and follow the correct procedure.
By raising a dispute, contacting your bank’s customer care, and keeping records of your loan closure letter and payment receipts, you can usually get the wrongly deducted EMI refunded within a few working days.
Remember: the sooner you take action, the faster you can resolve the issue and protect your financial peace of mind.
Need Help with Loan Issues?
At Adiguru Financial Services, we don’t just help you get loans—we also guide you through tricky situations like wrong EMI deductions, loan closure disputes, and settlement guidance.
Our team works closely with banks and NBFCs to ensure you never feel stuck.
Whether it’s a car loan, home loan, mortgage, or refinancing, we can assist you in getting the right solution.
📞 Call us now: +91 886 652 9124 | +91 989 840 9871
📧 Email: info@adigurufinancialservices@gmail.com
🌐 Website: www.adigurufinancialservices.com
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FAQs
Why was EMI deducted after I closed my loan?
It usually happens if the ECS/NACH auto-debit wasn’t cancelled or the system wasn’t updated in time.
Can I get my EMI refund back?
Yes, banks are obligated to refund wrongly deducted EMIs, usually within 7 to 15 working days.
Should I stop the ECS from my side?
No, only the bank can officially cancel the ECS mandate. Always request them to do it in writing.
What if the bank doesn’t refund?
First, escalate to the bank’s grievance officer. If that doesn’t work, file a complaint with the RBI Ombudsman.
Can I adjust the deducted EMI in a future loan?
Generally, banks will refund the money directly to your account. Adjustments in future loans are rare.
How long does it take to get an EMI refund?
Usually 7 to 15 working days, depending on the bank and its internal processes.
Will the refund include interest or a penalty?
No, banks typically only refund the principal EMI amount that was deducted.
Can this happen with car loans specifically?
Yes, it can happen with any loan, especially if an auto-debit instruction was active until the last day of closure.
Is it necessary to collect post-dated cheques back?
Yes, it’s very important. If you don’t, they may still be presented for payment after your loan is closed.
How do I avoid such issues in the future?
Close your loan at least 7 to 10 days before your next EMI date, confirm the ECS cancellation in writing, and keep all your proof of closure safe.
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