Personal Loan: If you are taking a personal loan, then do not sign the agreement without checking these 3 things..

Taking a personal loan has become easy these days, but there is a big truth associated with it, which is that most people pay attention only to the interest rate and EMI while taking a loan. They either look at the rest of the terms and conditions quickly or do not read them at all. This carelessness can cost you heavily in the future.

When a bank or NBFC gives you a personal loan, it also comes with a personal loan agreement. This paper is not just a formality, but a legal document, in which every condition of your loan is written - whether it is processing fees, part prepayment rules, or early loan closure charges.

What is a personal loan agreement?

A personal loan agreement is a legal document in which the deal between the bank and the borrower is written. It includes the loan amount, interest rate, loan tenure, EMI, fees, charges, rights, and responsibilities of the bank and the borrower. Since it is a legally binding document, it is very important to read it carefully. By doing this, any misunderstanding or dispute can be avoided in the future.

Pay attention to these 3 things.

1- Loan amount, interest, and tenure

It is written in it how much loan you got, what the interest rate is on it, and how much time it has to be repaid. The EMI schedule is also there in it, so that you can know on which date EMI will be deducted every month and when the loan will end.

2- Processing fee
Banks and NBFCs charge a fee for processing the loan, which is usually 1-5% of the loan amount. This amount is often deducted at the time of getting the loan. That is, if you took a loan of ₹ 5 lakh and there is a processing fee of 2%, then you will get only ₹ 4.9 lakh. Note: this fee is non-refundable, whether the loan is approved or not.

3- Part prepayment and foreclosure charge
Part prepayment: If you have extra money, then you can reduce the burden of the loan by depositing some amount apart from EMI. But the bank can also charge a fee on this. For example, if you make a part payment of ₹25,000 out of ₹2 lakh outstanding loan and the fee is 2%, then you will have to pay ₹500 + taxes extra.

Foreclosure charge: If you want to repay the entire loan before time, then the bank can charge up to 2-4% on that too. Many banks do not allow foreclosure in the first 1 year.

Why is it important to read all this?

Everything written in the personal loan agreement is binding on both the bank and the customer. It not only sets the rules, but also provides legal support in case of any dispute. It also contains information about where and how the dispute will be resolved.

As easy as a personal loan looks, its terms can be just as complicated. So do not sign just by looking at the EMI and interest rate. Processing fees, prepayment rules, foreclosure charges - read and understand everything. Remember, only with the right information can the loan burden become lighter and stress-free.

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