Taking Personal Loan? Don't Forget To Ask These Questions From Your Bank

Personal loans are a popular financial tool in India, serving various purposes for individuals and families. When considering taking a personal loan from a bank in India, it’s crucial to gather information to make an informed decision.

It’s important to ask all of your questions before you take out a personal loan. This will help you make an informed decision and avoid any surprises down the road.

Here are top questions you should consider asking the bank/NDFC/lender:

Interest Rate:

What is the applicable interest rate for the personal loan? Is the interest rate fixed or variable? Are there any special conditions or criteria that can affect the interest rate?

This is the most important question to ask, as it will determine how much you will pay in total for the loan. The interest rate will vary depending on your credit score, income, and other factors.

Loan Tenure and Repayment Terms:

What is the maximum and minimum loan tenure available? Are there any prepayment charges or penalties if I decide to repay the loan before the tenure ends? What are the repayment terms, and can they be customised to suit my financial situation?

If you plan to pre-close your personal loan before the end of the tenure, you may be charged a pre-closure penalty. Ask the bank about the pre-closure process and charges before you take out the loan.

Fees and Charges:

What are the processing fees associated with the personal loan? Are there any hidden charges that I should be aware of?

In addition to the interest rate, there are a number of other fees and charges that may be associated with a personal loan. These fees can include processing fees, prepayment penalties, and late payment fees. Be sure to ask about all of these fees before you decide on a loan.

EMI:

How is the EMI (Equated Monthly Instalment) calculated, and are there any charges for late payments?

What is the repayment tenure? The repayment tenure is the length of time you have to repay the loan. The repayment tenure will affect the size of your monthly EMI.

A shorter repayment tenure will result in a higher EMI, but you will pay off the loan faster. A longer repayment tenure will result in a lower EMI, but you will pay more in interest over time.

Eligibility Criteria:

What are the eligibility criteria for obtaining a personal loan? How is my loan eligibility determined? Are there any specific documents or collateral required for the loan approval?

There are certain eligibility criteria that you must meet in order to qualify for a personal loan. These criteria may include your age, income, credit score, and employment status. Be sure to ask the bank about the eligibility criteria to make sure you qualify for the loan.

Security and Insurance:

Is the personal loan secured or unsecured? What type of security or collateral, if any, is required? Is there an option for loan insurance, and what does it cover?

It’s advisable to carefully read the loan agreement and ask about any terms or conditions that are unclear. Understanding the terms and conditions thoroughly will help you avoid surprises and make sure that the loan aligns with your financial goals and capabilities.