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What You Must Do After You Get A Loan - Checklist

Just because the loan amount is credited to your account, doesn't mean the end of the process for you. If anything, it marks a beginning of a new set of activities for you. You now have an obligation to fulfil responsibilities towards the bank as well as regularly conduct some crucial administrative activities for at your . So, here's a checklist for what you must do after you get a loan:

1. Meet timely payments: Although making timely payments is an obvious responsibility, many people are still careless about their equated monthly instalments (EMIs). EMI can be generally made through post-dated cheques (PDCs) or direct debit from your account. Any delay in EMIs can lead to legal issues for you like triggering a loan default or negatively affecting your credit history.


2. Read loan statements carefully: Loan statements include information on unpaid principal balance amount, summary of the year-to-date interest paid, or any late charge payment. You must check these figures are up to date and that your lender has not made a calculation mistake. Its your responsibility to do this because you have more to lose in case there is an error.


3. File loan documents in one location: Maintain a paper trail of all loan documents and your legal loan contract, as well as letters received from the lender. This evidence can be important in case of dispute with the lender.


4. Review your loan tenure: In case you are facing a financial crunch and cannot afford the current EMI, you can always get your EMI reduced by extending the tenure of your loan without any extra charges. But, do this only if you can continue with the burden of EMIs over an extended time period.


5. Consider prepayment options: If the prepayment penalty is not too high, you might consider prepaying a loan under the following scenarios:
   • If you get your yearly bonus or any inheritance, use this windfall to pay off the loan.
   • When you have surplus money even after accounting for any emergencies and you might not have immediate need for this money.
   • When there are options to refinance with a cheaper rate loan from another lender without any charges.


6. Consider refinancing in case rates fall: If loan rates fall in the market, you can ask your lender for for a lower rate of interest. Sometimes you might be able to do this at the same lender. At other times you might need to go to another lender, but only after you pay the original lender a penalty fee.


7. Monitor if your EMI amount changes: In case you have a loan with a floating rate of interest, keep track of the interest rate changes as that brings a corresponding change to your EMI. Doing this will help you in evaluating how much lesser or more EMI you pay with every change in interest rate.


8. Request for income tax certificate in case of home loans: For those with home loans, remember to take your income tax certificate from the bank as that helps you to claim tax benefits in your annual tax return.

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