Personal Loan: Making this mistake while signing the agreement could be a huge disaster...

These days, it's quite easy to get a personal loan. So, when you need money urgently, it seems like a great option. Hearing the news of loan approval from a bank or financial institution often makes us jump with joy and hastily sign the agreement, but be careful! This haste can prove costly later. If you don't pay attention to certain important points while signing the agreement, you could become a victim of fraud or inadvertently be bound by terms that could be detrimental to you.

Today, we'll tell you about the 7 most important things you should check before signing a personal loan agreement to avoid any kind of disaster or fraud.

1. Accurate Interest Rate and EMI Information

First, check your interest rate and EMI details in the agreement. Is the interest rate the same as agreed? Is the EMI amount the same as you were told? Sometimes, the document may state a different rate, which could disrupt your budget. Make sure the interest rate is 'fixed' or 'floating'. Floating rates are subject to change.

2. Processing Fees and Other Charges
There are various fees levied when taking a loan, such as processing fees, stamp duty, verification charges, late payment charges, etc. All these charges should be clearly stated in the agreement. In fact, some banks or fraudulent companies may impose hidden charges, which you discover later. Find out the total amount of all charges in advance.

3. Prepayment/Foreclosure Clauses and Fees
Do you want to repay the loan early? If so, it's crucial to know if the bank is charging any prepayment penalty or foreclosure charges. Some banks charge this fee, while others don't. Therefore, if you plan to repay the loan early in the future, this clause is crucial.

4. Loan Tenure
The loan repayment period (e.g., 12 months, 24 months, 36 months, etc.) should be clearly stated in the agreement; your EMIs depend on this period. Ensure this period matches your agreed-upon terms, as an incorrect term may increase or decrease your EMI.

5. Default Terms and Consequences
What are the consequences if, unfortunately, you fail to pay your EMI for a particular month? The agreement should clearly state the terms of default and penalty charges. This may include things like late payment fees, impact on your credit score, or legal action. Read these carefully to be aware of future problems.

6. Loan Cancellation Policy
Do you have the option to cancel the loan agreement after signing it? If so, what are the terms, and how many days are required? Some banks offer a 'cooling-off period' during which you can cancel the loan without penalty. This information should also be included in the agreement.

7. Verification of Documents
Last and most important: Before signing the agreement, double-check all documents (such as your identity card, address proof, and income proof). Make sure they are free of errors. Also, keep a copy of the agreement. If the bank doesn't provide you with a copy, avoid signing it.

Finally, the most important thing about personal loans:
A personal loan is a major financial responsibility. Therefore, instead of rushing, exercise patience. Read every page of the agreement carefully. If you have any doubts, seek clarification from a bank employee. If you still don't understand something, seek help from an expert or financial advisor. A little caution on your part can save you from major problems and fraud in the future.

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.