What Is a Loan Agreement? What to Check Before You Sign

Obtaining a personal loan is as simple as a few clicks. However, you should always read the loan agreement before pressing “Accept”. 

Loan agreements specify all details about the loan you are taking, whether it is for upgrading your home, travelling, or even managing medical expenses. 

If you are a salaried professional between the ages of 25 and 55, the procedure is smooth, entirely online, and with minimal hassle, thanks to services like Rupee112.

What is a loan agreement?

A loan agreement is a contract that binds you, as the borrower, to the lender. The document includes:  

• The loan amount

• The duration of repayment  

• Your obligations as a borrower  

• Penalties for failing to pay  

• Conditions regarding overdue payments or defaults  

A loan agreement is meant to provide structure to your finances during the duration of the loan and promote fairness between both parties.

Key Features of a Modern Personal Loan

• 100% Digital Process: No waiting in line; apply on your phone at any time.

• Instant Approval: Optimized for high approval rates.

• Loan Amount up to ₹100,000: Access funds whenever you may need them for any requirements.

• No Collateral Required: Unsecured and risk-free.

• Hassle-Free Experience: Goodbye to the tiresome paperwork.

• Exclusively available for salaried employees.

• Age: 25 to 55 years

These and other amazing perks are available on apps like Rupee112.

What Should You Check Before Signing a Loan Agreement?

Even when everything looks fine, take your time in reading the agreement in detail before clicking "I Agree". Here is what to focus on:

1. Loan Amount & Tenure  

Ensure the disbursal amount matches your need and is clearly stated. Ensure that the repayment period is defined too. This will impact your monthly cash outflow.

2. Repayment Terms  

Is it a fixed monthly repayment, or is it flexible? The repayment schedule should preferably align with your salary cycle.

3. Hidden Fees or Processing Charges  

Even if it is a digital process, check if there are any extra charges. Convenience fees, processing charges and others like these can all add up.

4. Late Payment Terms  

Understand what the penalty for missing a payment is. Some applications offer reminders or small grace periods, or what are more commonly known as “soft landing zones”. It is best to know what the scenario is if you miss the mark.

5. Digital Process Details  

Ensure that there are no physical visits or paperwork required. A simple tap and scan should suffice. Make sure the agreement reflects this.

6. Borrower Obligations  

Look out for whether the agreement stipulates maintaining a certain salary credit or job retention period. Understanding these clauses is essential even if they seem trivial at first glance.

7. Help and Contact

Check that the platform offers customer support through chat, email, or a dedicated phone line for questions. You should never feel alone during repayment.

Loan Signing should not be as complex as solving a puzzle. This process can be seamless and straightforward when using the appropriate resources and platforms. Always check the obligations you are being offered, and remember that decisions should always be well thought out.

If you are looking for a digital lending experience, Rupee112 is here to help.