Questions to ask before signing personal loans agreement

Questions to ask before signing personal loans agreement

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Personal loans are the loans provided to satisfy the needs of an individual. A wedding is a significant purpose for which loans can be utilized for the marriage ceremony. Marriage is considered one of India’s significant events, and people tend to spend a lot of money for marriage purposes; thus, some loans are required by some people to conduct the marriage ceremony. The personal loans are charged starting from 11% up to 24% by the lenders. The exact interest rates vary as per the lender to lender. The borrower is not exempted under any tax benefit for the personal loans. The wedding includes many kinds of expenses like the hall decoration, food, accommodation, band music, catering, and expenses for carrying out rituals. Etc. Also, the people have a craze for doing a ‘big fat wedding’ which carries expenses of about Rs.50 lakh for carrying out a wedding ceremony. The borrower can repay the installments for the wedding loans up to the next 4-5 years. The loans can be approved with minimal documentation, and also within 48 hours of approval is possible for the wedding loans.

The personal loans for marriage can be availed against the savings in fixed deposits or else financial investments in stocks or mutual funds. The loan amount gets deposited into the bank account directly, and the funds can be utilized for any personal purpose. The bank does not ask the borrower for the details regarding the utilization of funds. The installments start with immediate effect after the loans are secured. There is a heavy penalty being charged in case of the borrower delays the payment of the installments. The borrower can get instant approval of loans from the bank once the application is given. The process of approval of personal loans is faster as compared to home loans. The bank verifies the CIBIL score of the borrower, and accordingly, the bank decides on the approval of loans. If having a poor credit score, the borrower can improve the score by repaying the existing installments or paying credit card bills on time. Without a good credit score, it is impossible that the bank would approve an individual’s loans. The interest rates charged for personal loans depend upon the borrower’s CIBIL ratings, salary, and repayment ability.

Questions to ask about the personal loans agreement

  • What is the tenure of the loan agreement?
  • How many penalties would be charged in case of the delay of the loans installment?
  • What are the interest rates being charged by the borrower?
  • Are there any pre-payment charges being applied to the borrower in case of the early payment of EMI’s?
  • What is the loan installment being applicable on a monthly basis to the borrower?
  • Are there any specific terms related to the usage of funds in the case of personal loans?
  • Are there any hidden charges being applicable else than the processing fees?
  • What are the processing fees being charged by the bank?
  • What are the terms & conditions being applicable in case of default of loans?
  • What is the reason for the processing fees being charged by the lender?
  • What is the full form of ECS mandate in case of the loan agreement? What does it stand for?
  • Can loans be transferred to another lender in the case of the other lender offering loans at more competitive rates?
  • What is the legal action being taken by the borrower in case of the default of loans?
  • What is the loans interest repayment type fixed or floating ones?
  • What does the borrower have to do after the payment of the loans along with the interest?
  • How much is the repayment amount being applied to the principal amount of the loans?

The borrower should understand the terms & conditions of the loans and some of the sample questions are being mentioned related to the personal loan agreement which the borrower should ask before signing the loan agreement.

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