Taking a loan? Here’s your checklist

Ever noticed how everyone is offering loans nowadays? From mobile phones to home appliances to cars to even holidays, everything is offered on “easy EMI” options even before you step into a store. While making a purchase on credit can be a sound financial decision, it’s important to be able to select a lender who’s responsible, transparent and has your best financial interest at heart. Here’s our “Top 6” checklist to keep handy when you’re looking to take on a loan and select a financial partner.

 Financial comfort

A loan is never meant to become a financial burden, and a good lender will always try to understand your financial situation and suggest an appropriate amount of credit, that you can comfortably repay. The thumb rule to broadly follow is to take your monthly household income, subtract your monthly expenses, keep aside about 20% for savings and whatever remains is what you can spend on a monthly EMI to repay your loan. A responsible lender will never load on a higher monthly EMI than you can comfortably repay each month. This will ensure you can repay your loan, as well as grow your credit score.

 Choose your lender

Many a borrower have had their fingers burnt by unregulated lenders with unfair and unethical practices. Before signing on for a loan, it’s important to check that you’re getting into a financial agreement with a regulated lender who’s registered with the RBI. You should be able to check their website and learn about the bank or financial institution, and also get all accurate information about the loan’s interest rates, fees and charges.

 Understand the basics

Probably the MOST important aspect of getting into any financial agreement like a loan, is to clearly understand the basics. For a loan, you should know your loan amount, monthly EMI (equated monthly instalment) amount, due date and loan tenure. Each of these can impact your overall financial health and should be understood in detail before signing on the dotted line.

 Fine print

Every lender has fees and charges for their services. What should be checked is that they are not hidden. When a sales representative is trying to sell you a loan, feel free to cross-question him/ her on fees and charges such as late payment fee or default fee, loan processing amount, early repayment or foreclosure charges. These should also be clearly and prominently displayed on your lender’s website as well as on the loan summary document.


Transparency is the cornerstone of any successful relationship, and the same goes for that of a lender and borrower. When signing on a loan, you should receive a documented copy (hard copy or e-copy) of your loan agreement, that should include all the associated terms of the loan as well as it’s fees, charges, repayment options and essential contact details like customer care number and website. Your lender should transparently share all loan related information and should be upfront and open in communication with you.

 Your best interest

A lender who has their customer’s best financial interest at heart is one who will go above and beyond to ensure you are financially secure. Since skipping even one monthly EMI can impact your credit score, a responsible lender will go the extra mile to remind you for an upcoming due date, allow flexibility to select a convenient payment date, as well as give you multiple online and offline channels to make your payments. A lender who is customer centric, will be a financial guide and partner for their customers, and help them throughout their journey, from enquiry till closure of the loan.