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Carefully evaluate and forecast your cash flows to determine your future income flow. Ensure that the EMI payment would be comfortable for you so that there are no problems regarding missing a payment and negatively affecting your credit score.
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Financial institutions may have hidden charges that they do not disclose unless the client specifically asks for them. Remember to ask for the loan processing fees and other charges to have a complete understanding of the overall cost of the loan.
Sometimes financial institutions charge fees as a part prepayment or foreclosure in case you want to terminate the loan earlier and save interest costs when you have adequate cash in hand.It reduces the benefit of prepayment. Ask your lender about such charges and penalties that you may have to pay, and the circumstances under which they are charged.
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Many times, buying a loan insurance policy is compulsory for high ticket loans, and the information regarding the premium to be paid is provided at the last moment when you are left withno option but to buy the policy. Ask your financial institution if it is compulsory to buy such an insurance and what would be the premium amount. Since it may get added on to your loan, it is better to take an informed decision.
Ask about the Loan to Value ratio to get an idea about the maximum funding that you may get on your property or asset mortgaged.
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Manage your cash flows efficiently by knowing how much time it will take for the loan disbursal as different financial institutions have different loan processing time.
Taking a loan may change your financial situation for a significant period of time. However, be careful while reading the fine print of the loan agreement and then go ahead to make an informed decision. Thorough understanding the terms and conditions before signing the loan contract will keep you safe from unpleasant surprises.