You often get calls from banks offering loans within as short a turnaround time as 48 hours. But, in a hurry to sign up for the debt, you forget the diligence due, and that could result in hassles and disappointment down the line. Take a few minutes to make sure you and the lender are on the same page.
Ask for the loan agreement: Responding to the negligent behaviour of several banks, the Reserve Bank of India (RBI) last week issued a circular to lenders that makes it mandatory for them to provide a hard copy of the loan agreement to the borrower. A simple document that spells out the terms of the loan could mean the difference between certainty and uncertainty and rule out any possibility of confusion between the borrower and the lender. As far back as in 2003, RBI had mandated that banks need to furnish a copy of the loan agreement to the borrower, but compliance was lax. The latest RBI rejoinder seeks to underscore the importance of this paperwork.
Loan documents should be signed: To make sure the documents are valid legally, always make sure the paperwork is signed by an authorized official of the bank. In addition, make sure the loan document includes sentences that state the borrower would be informed about any future changes in the terms and conditions of the loan agreement. You have a right to know this information promptly.
EMI should match interest rates: Always do the arithmetic and make sure the equated monthly instalment (EMI) gels with the interest rate you have been offered. Sometimes, in the fight to offer lowest interest rates in the market, bank agents provide you wrong EMI amounts to get you to sign on the dotted line. More often than not, when it comes to payment that EMI tends to be higher than the actual amount worked out at the interest rate promised