Questions to ask your loan provider

21 Jun, 2017

Almost every one of us requires a loan at some point of time in life. Whether it is for buying a house of your own or a new car or for some personal expenses, a loan becomes a necessity for most of us especially the salaried class of people. If you are also contemplating of availing a loan but are confused and clueless as to how to go about with the whole process, then this post provides you with some helpful pointers which you must ask your loan provider before you finally sign dotted line.

Rate of interest

This has to be the most critical as well as the most obvious thing which you must ask your loan provider about. So many things are dependent on the rate of interest. If not for smaller amounts, but for big sized loans rate of interest become quite critical as then the repayment amount also changes considerably. When you enquire and make note of the applicable rate of interest, you should also ask him if the rate of interest is a fixed one or a floating one meaning, that if tomorrow there is an increase in the rate of interest, your rate of interest will also change and your loan amount shall be computed as per the revised rate of interest.

Terms of your repayment

Another thing which you must find out is the procedure for repayment and whether there are any specific terms and conditions laid down for it. This is just for your safety so that you know and are fully aware of how the procedure takes place and to avoid any unpleasant surprises at a later stage. While doing so, specifically also ask whether the bank levies any fees or charges for foreclosure or prepayment. Most of the banks or financial institutions these days impose a fixed foreclosure amount because if you close your loan account before the due date then the bank has to forgo the interest factor which actually is its main profit earning source. However, the foreclosure amount is actually negotiable and the bank manager can actually reduce that. Try doing it.

Processing and other charges

Last but certainly not the least, also make it a point to ask your loan provider whether they put any additional fees either at the time of processing your loan application or during or even after the loan account is completely closed. Some banks also tend to make their customers pay for something called as ‘processing fees’ when you make an application for availing the loan facility from the bank.  These processing charges are also negotiable and you can always request the bank manager to waive off these charges.

These are some of the questions or queries which you, as an aware customer must throw at your loan provider and seek answers from him as this will only ensure that you don’t expect any hurdles or unexpected and unpleasant surprises while repaying your loan.

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