Look beyond the monthly EMI
Record the loan amount, tenure, interest type, periodicity, fees, insurance, prepayment conditions, collateral and consequences of a missed payment. A lower EMI can simply mean a longer repayment period and a higher total repayment.
Ask for and read the key facts
For retail and MSME term-loan products, RBI materials describe a Key Facts Statement designed to present important information, including the all-in cost, in a clear format. Compare the lender’s official documents rather than relying only on an advertisement or an app screen.
Match the loan to the use
Use borrowing purposefully. Long-lived equipment, working-capital gaps and marketing experiments have different risk profiles and cash-return timing. Keep the use of funds separate in your records so you can see whether the asset or activity is producing the expected return.
Protect against urgency
Verify the lender and read the agreement before paying any fee or sharing sensitive data. Do not make a borrowing decision based only on a calculated EMI. If the decision is material, review it with a chartered accountant or qualified financial adviser.
Sources and further reading
General information only; not lending, investment or financial advice.