Your Money: What key fact sheet tells about your loan

financialexpress.com:

A Key Fact Sheet (KFS) is a simplified document that provides borrowers with essential information about a financial product, such as a loan or a credit card. It is intended to help borrowers understand the key terms and conditions of the product and make informed decisions that align with their financial circumstances and risk tolerance.

Transparency

The main objective of KFS is to foster transparency by ensuring that borrowers are fully informed about the terms and conditions of financial products before committing to them. This open communication promotes trust between borrowers and financial institutions. Providing key information is crucial for consumer protection. It reduces the risk for borrowers and safeguards their investment in case of disputes. So, what are the factors that you should check?

Interest rates

This is the single biggest factor that impacts your finances. You must plan your repayments based on the interest rate on your product. It could be borrowing interest, or delay payment interest or penalties for late payments. That is why consumers must understand the applicable interest rates, including the type of interest (fixed or floating), reset frequency, and any applicable charges.

Fees and charges

Be aware of all fees associated with the product, such as processing fees, late payment charges, prepayment penalties, and any additional charges. Check for joining fee, annual fee, interest rate cash withdrawal fee, interest rate, annual fee waiver, late payment fee, interest free period, etc.

Each KFS may have different details, but you must know what impacts you financially. For example, a loan borrower must check details such as tenor of the loan, disbursal amount, repayment frequency, processing fee