Core Factors You Must Consider Before Signing Loan Agreements

Taking loans is an act of massive responsibility that requires the concerned loan seeking entities to take very comprehensive and calculated steps so that they don’t fall into adverse situations later. In this respect, here are some core factors that require thorough consideration from borrowers before signing any loan agreement…

Who exactly are you taking the loan from?

The source of your loan plays a massive role in determining the authenticity of the deals, the extent of legalities involved and of course, suitability in terms of paying off. At present, there are 2 primary sources of loans that are the conventional banks and next are the individual lenders that can be approached through online channels. It is always safer to approach the former in mainly terms of authenticity. However, if you are looking for smaller loan amounts with a bad credit history, a well chosen secondary source can come as a lifesaver.

What are the terms and conditions of the loan?

This is perhaps the most important factor that all loan seeking entities need to consider with utmost caution while signing a loan agreement. The terms and conditions that require extreme caution include…

• The value of interest – This depends upon 2 core factors; whether your loan is secured or unsecured and whether you have chosen the option of fixed or floating interest.
• The duration of repayment – Whether 6 months or 6 year, the duration should be compatible with your income.
• Number of repayment options that the concerned entity can choose from – Whether you wish to pay the loan in EMIs or lump sum with interest at the end of the duration, it should be mentioned very clearly in the papers.
• Nonpayment / delayed payment / defaulting penalties need to be reviewed very carefully as the consequences can go anywhere from hefty fines to jail terms.
• Terms and conditions associated with pre payment including interests should also be mentioned very clearly.