One of the popular financial services offered by banks and other financial institutes are Personal Loans. You can apply them for varied reasons and repay them in easy and affordable instalments. Most lenders enable you to apply for them online, and the funds get disbursed into the account instantly. But when borrowers apply for the loan online, they do not read the essential clauses in the agreement.
So, the following are the most important clauses you should watch out for:
Regarding documents
As mentioned, you can apply for Personal Loan online. When you opt for online mode, you need to submit scanned copies of the documents. The agreement states that you need to upload all the relevant Personal Loan documents, including the KYC papers. It says that the lenders rely on them to approve the loan.
Regarding eligibility criteria
This clause mentions that lenders have the discretion to decide the Personal Loan eligibility criteria. You need to fit that for getting the Personal Loan approved. These get readjusted or changed anytime, according to the lender’s guidelines. If you do not fit the same at the time of application, lenders reject them.
Regarding interest rates
The most important clause to check when you apply for Personal Loan is the interest rates levied by lenders. Check if lenders approve your loan based on the agreed interest rates. You should not hold confusion concerning the interest rates charged. Make sure that the written communication on the contract matches the verbal notes said by the lender. Reading the agreement thoroughly helps clear your doubts or confusion about the same.
Regarding the loan amount
While you need to check your eligibility before the loan application, check the maximum amount you are eligible for. The amount you qualify for gets decided based on your monthly income, credit score, and repayment capacity. If you think you can get higher eligibility from another lender, decline the current loan offer by simply not signing the deal.
Regarding tenure, EMIs, and prepayment
The Personal Bank Loan agreement should clearly state the loan tenure in months. It should also mention the exact equated monthly instalments you would pay for the entire term. Additionally, you can see how your EMI gets structured. The principal amount and the interest component get calculated every month. Besides, check if you will get charged any penalties for prepaying the loan.
Regarding free-look period
All opting for Personal Loans in India should read the free-look clause. Essentially, this mentions that if you cannot agree with the terms set by the lender or get a better deal from another lender, cancel the loan within two days from the disbursement date. In such scenarios, repay the lender the entire amount as it is without any interest rates.
https://www.bankofbaroda.in/personal-loan-eligibility-calculator.htm