Facts to Know about Personal Loan Agreement

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Facts to Know about Personal Loan Agreement
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What is a Personal Loan Agreement Why it is
Important?   A personal loan agreement is the one
which specifies the clause for your personal
loan. The clause is set by the lender and by
signing on it you agree with each term
condition for the entire tenure period.
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• Clauses of a Personal Loan Agreement
• The borrower agrees that all the documents given
  as details or as KYC document are genuine and the
  bank should rely on that to approve their loan
  agreement.
• The lender has all the right to decide the
  eligibility criteria for Loan as per their policy
  and guidelines which you need to fulfil in terms
  to get approved for your personal loan.

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• The personal loan agreement includes the Interest
  Rate on which your loan has been approved.
  Checking the documents carefully will clear all
  your confusion and doubts.
• The agreement also contains the duration on which
  the interest rate is calculated, generally, it is
  being calculated on a yearly basis.

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• Loan tenure is the time period in which you are
  going to repay the entire loan along with the
  interest rate. This particular time period is
  mentioned in the loan agreement and hence it
  becomes very important to check for this.
• Free Look Period In case the borrower disagrees
  with any of the terms of Loan, or in case he/she
  is not willing to have the loan, then there is an
  option given to the borrower to cancel the Loan
  within two days of disbursement.

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• This facility is only available with few lenders,
  so in terms to get this facility you have to
  check your loan agreement document thoroughly
  before signing it.
• The personal loan agreement also includes the
  amount which you will be paying monthly as the
  EMI towards your borrowing. To be clear about the
  amount it is required to check your loan
  agreement and then only sign.

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• Lock-in period -For Pre-payment different lenders
  have different policies and to know yours you
  should read your loan agreement carefully.
• Pre-payment penalty Borrowers may be allowed to
  foreclose or to prepay the loan amount after 12
  months but against some fees. This fees which
  lenders charge against prepayment and pre-closure
  is known as pre-payment penalty.

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• In the case of Default Future is totally
  unpredictable and you cant say that you can
  never default with your EMIs.
• In case of default (when the Borrower fails to
  pay the Loan), lenders charge some particular
  amount as the penalty. When you sign your loan
  agreement you agree to pay how many penalties
  they have mentioned there.

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By signing the loan agreement borrower commits to
all the above-mentioned Terms of Agreement, and
once it is done no changes can be made. So, it is
very important to understand your personal loan
agreement completely before you sign it.