A personal loan in Ahmedabad is a popular choice for individuals who have expenses to meet but no savings to match them. Personal loans are easy to get and also hassle-free and so they become the go- to- tool for many in India when they have an urgent need for cash. One characteristic of the typical Indian borrower is that he tends to be cautious, especially about anything related to finances. This is a good thing because it helps you avoid a situation where you are in over your head with debts but if you are in need of funds, this may also prevent you from taking a loan simply because you find the terms and processes confusing. One of the most important aspects of this kind of unsecured personal loan is the sanction letter and here is what you need to know about it.
The first milestone in your loan journey
The sanction letter is the first big milestone you cross in your loan journey. Before you reach this stage, you have:
- Evaluated your finances
- Determined how much loan you need
- Short-listed good, trustworthy lenders
- Comparison shopped lenders and loan products
- Checked your eligibility with each
- Finalized a loan that you want to apply for
- Filled in and filed your application along with the initial documentation that is asked for
Once you have sent in your application, the ball is in the court of the lender you have chosen for your personal loan in Ahmedabad. You now await intimation that your loan has been approved. The sanction letter does this job for you.
What is the sanction letter?
The sanction letter is the document that tells you that the lender has approved your application for his unsecured personal loan. The letter is issued only after a thorough check of all your data and the documents you sent in. It means that you have fulfilled all the criteria that the lender has set up for the loan and you are eligible. The basics that may be checked for issuance of a sanction letter are:
- Your credit score/ history
- Your debt-income ratio
- Your income from salary/ other sources
- Your current debt status
This sanction letter is one of the most crucial documents in the loan process and you must very carefully preserve it somewhere safe for ready reference. Keep in mind that a loan is a long-term financial responsibility so you must keep all pertinent documents safe for at least the duration of the loan.
The contents of the sanction letter
What makes the sanction letter so significant is also its contents. Apart from letting you know that you have been approved for the loan, the sanction letter also contains all the important details about the financial transaction you will be entering into with the provider of this unsecured personal loan. A look at this letter tells you all about the terms that you will be agreeing upon by taking this loan. It becomes a ready reckoner for you in the future to refresh your memory about the loan specifics. It lists out:
- The loan amount that has been approved (check if the amount approved is the same as what you applied for)
- Loan tenure (the duration over which you will be repaying the loan, say 12 months or 48 months- you will be committing to fulfill the responsibility to pay the loan back fully by the end of the tenure)
- Interest rate- the rate at which interest applies upon the total loan amount
- Additional charges like processing fees (Pay attention to these because most borrowers miss these charges that add on to the total cost of the loan)
- EMI amount- a very significant number showing you the amount you must repay every month for the duration of the loan
The sanction letter is NOT the final agreement between you and the lender. Once you have this letter in hand, you have to send in further documents that will be verified before the personal loan in Ahmedabad is processed and the contract executed. It is only after the loan agreement execution stage that the lender disburses the cash to you, crediting it to your account.
