Receiving loan itself a long process for a consumer. But the phase after receiving a loan amount can be more hard for someone, as they have to pay EMI in a regular intervals. The amount of EMI might have confused you by the time. Actually, there are few things which your bank might have don’t tell. So let’s see about the topic.
What are the extra charges?
The interest rate is only half the story. Banks and NBFCs often only display the interest rate, but the true cost is the APR, which includes processing charges, service fees, and other hidden expenses. Looking at the APR will tell you what your actual cost will be over the course of a year. If you’re late on EMIs, the bank will not only impose a fine but may also increase the interest rate. Sometimes, after just one or two missed EMIs, the penalty can become so high that the entire loan becomes unaffordable. Therefore, carefully read every clause related to default.
Calculate the total interest
Sometimes, banks extend the loan term to make the EMI appear lower. This may lower your monthly installment, but the total interest may increase significantly. For example, repaying the loan in 6 years instead of 3 years could double the interest. Therefore, calculate the EMI and total payment in advance. Every bank’s loan agreement specifies what constitutes a “default” and what action the bank can take. This includes matters like court cases, recovery of the collateral, and credit report impact. Don’t take this lightly, as it can have a significant impact on your financial image.
If a bank or NBFC violates any rules, you have the right to complain. The loan agreement should specify where and how to file a complaint, including to the banking ombudsman, regulatory authority, or consumer court.