If you’re taking your first loan it’s easy to get overwhelmed with the experience. From even before you think of buying the latest smartphone, laptop or home appliance, your inbox and phone will be pinging away with offers for loans at affordable interests, zero down payments and much more! While buying on credit has great advantages, it’s also very important to choose a responsible lender and know your rights as a borrower. Here are our top 5 “must-know” rights of a borrower:
Know your loan
A loan summary / agreement, is a legal document between a lender and borrower containing details of loan amount, monthly EMI amount, due date and interest rates, fees and charges etc. It is a legal document and a proof for all future communication or reference to your loan.
A responsible lender will always ensure that this document is rid of financial jargon and is easily understandable by everyone.
A copy of your Loan Summary
As a borrower, you are entitled to receive your loan summary document from your lender, either in printed or soft copy, containing all the relevant details of the loan you’ve signed up for. Generally, one copy of this document is held by the lender and one SHOULD be shared with you, as it is proof of the legal agreement on the mutually agreed terms between you and your lender. Should you face a dispute related to your loan in the future, this document is your most critical legal evidence of your agreement with the lender.
Know your Fees & Charges
A borrower is entitled to being clearly explained all fees and charges related to one’s loan, in a simple layman language, even before signing up. While no-one will lend money for free, it is a borrower’s right to be communicated all the fees and charges associated with his/ her loan. These could be sign-up or processing fees, default fees, foreclosure fees etc.
Our recommendation will be to always take a loan from a responsible lender who clearly states all fees and charges related to your loan on your loan summary document.
As a borrower, you have the right to know your repayment options with regard to your loan. Whether on the lender’s website, your loan summary document or by contacting your lender through a customer care or mobile app, you should be assisted to know your repayment options.
A responsible lender will always have multiple repayment channels such as Direct Debit/ ECS from a borrower’s account, online payment, payment through kiosks etc.
Upon the completion of one’s loan, a borrower has the right to ask the lender for a document to prove its successful closure. Such a “No-Dues” document is often provided up-front by lenders, or sometimes, is provided upon request. A responsible lender will never hesitate to share this with a borrower who has responsibly repaid all his/ her EMIs and completed the loan.