Personal Loan Rules, Terms & Conditions You Should Know! (InfoGraphic)

Following safe practices while taking a personal loan is very important. Below are some of the personal loan rules you should know:

1. Credibility of the Lender

Check the credibility of the lender before borrowing by checking user reviews, user experiences, etc. Also, ensure, the lender is recognised by the RBI and has got a license from RBI to carry the lending business in India. Don’t get lured by offers that sound too good or complicated to be true to avoid scams. Avoid borrowing from unregistered entities.

2. Be Certain About the Exact Interest Rates

While signing the loan offer document, make sure that you understand the interest rate agreed upon and printed on the loan offer document. Also, use the personal loan EMI calculator to check the effect of interest rates on EMIs.

3. Prepayment Details

Paying up your outstanding loan early is a good practice. It increases your credit score, but be aware of the foreclosure charges/ prepayment penalty before signing the loan document. Do note that many lenders do not allow part-payment of personal loans, and may allow foreclosure (providing you are willing to pay the entire outstanding amount) only after certain EMIs have been paid.

4. Hidden Charges

Look out for any type of hidden charges involved. Also, check the rate of processing fee. 

5. Uses of Loan

Confirm with the lender on the end-usage restriction of the loan amount, if any. Generally, lenders don’t put any end-usage restrictions on the personal loan amount.

6. Say no to Faulty or Complicated EMI Schemes

Always go for simple, easy to calculate EMI schemes. Thoroughly understand the EMI calculation process with the lender before signing the loan offer document.

7. Personal Loan Documents

Always provide all the documents asked by the lender while availing of a personal loan. It helps to improve your credibility with the lender. The absence of any document like income proof will cause your application to get rejected.

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