Personal loan statement: 5 key details every borrower must review

Personal loans provide borrowers with lifelines and ways to deal with sudden financial challenges. Medical expenses, surgery costs, education costs, and home renovation expenses are just a few reasons why individuals borrow funds and take personal loans.

This brings us to another critical factor, which is the concept of personal loan statements. Once a new loan has been applied for and released, the borrower will be provided with personal loan statements for this loan to make the entire process of repayment smooth.

Borrowers, hence, must understand personal loan statements, what each line represents. Here are five key elements in personal loan statements every borrower should review diligently.

1. Outstanding principal balance

Your statement clearly shows your remaining loan balance.

• Make sure that the opening and closing balances for the entire repayment cycle align with your repayment schedule.
• Any errors, mistakes or mismatches can indicate an incorrectly filled EMI application or a processing mistake.

2. EMI breakdown

Lenders generally divide your personal loan EMI into principal and interest components.

• Check whether the amortisation pattern matches what was shared in your loan agreement.
• If your EMI amount changes, such as under floating-rate loans, confirm the reason with your lender immediately.
• In such cases, never assume anything; always reach out to your respective lender and have a fair discussion.

3. Applicable interest rates

Interest rates, especially for loan applications cleared with floating or reducing balance structures, might change during your tenure.

• Verify the current annualised rate displayed in your statement. Use a calculator to match figures.
• Ensure any change corresponds to official communications from the lender.

4. Additional charges and fees

Your personal loan statement should clearly reflect all charges, such as processing fees, GST, and fines due, etc. You should look out for:

• Late payment fees: This is a fee imposed on borrowers who miss EMIs and due dates.
• Penal interest: This is a charge which is imposed as interest on the missed EMI dues.
• Processing or documentation charges: The financial institution also charges borrowers with documentation and processing charges for helping with the clearance, disbursal and management of the loan.

5. Repayment history and overdue status

This section displays personal loan EMIs that are paid, pending, or overdue.

• You should regularly review it to ensure auto-debit mandates (NACH or ECS) are functioning correctly.
• Any reported overdue or pending payment, even if incorrectly marked, can negatively influence the borrower's credit score.

Reviewing personal loan statements diligently every month helps borrowers stay on top of repayments and avoid unexpected errors or fees. Since interest rates are often high on personal loans, consistent monitoring makes it easier to identify potential errors and mistakes early, thereby preventing costly setbacks. With lending institutions increasingly promoting transparency, staying vigilant and informed is critical for safeguarding your financial health and long-term economic prosperity.

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