4 Major Clauses In Bank Loan Agreement That Bankers Do Not Highlight [They could hunt you later]
Banks have 4 major clauses in bank loan agreement that Bankers do not highlight when a customer want to access a loan. Taking loans is inevitable. There is a popular saying that nobody takes a bank loan to purchase bush meat.
Though no one takes a bank loan for the luxury of it, people access loans for several reasons, including for emergency purposes. The nature and purpose of the loan request usually makes people looking for loans not to pay critical attention to major clauses in the loan agreement. Most of the excuses for not caring about those major clauses are mostly because the person feels there is nothing he or she could do about such clauses, especially if the loan is for emergency purposes. Below are the three (3) major clauses in the loan agreement which bankers do not highlight that could come back to hunt the customer in the course of the loan
The four major clauses
1. The first major clause bankers do not highlight is whether the type of interest being charged is a fixed rate or a flexible rate.
The implications of a flexible interest rate is that, anytime economic conditions in the country change, the bank has the right to adjust the deductions being made to recover the loan, while a fixed rate means nothing can be done about the rates (deductions) if the economic situation changes.
2. The date deductions are made on a monthly basis.
Though most customers do not care when the deductions are made on a monthly basis, the implications of an unfavorable date could be expensive. When the deduction date is stated days before dates of salary payments, banks are likely to treat unavailable funds in accounts for regular deductions as a default in repayments and would charge default penalties on the loan repayment deductions just because the date for deductions is days earlier than the salary payment dates.
See also: Effect of Current Salary Negotiation Status On Personal Loans In January/ February 2023
3. Outright repayment charges. While certain banks or types of loans allow outright settlement of outstanding loans without any penalty, some banks and some types of loans charge penalties on settlement of outstanding loan amounts.
See also: Message From BoG To Mobile Money Loan Defaulter [You will pay at all cost if you owe]
4. The implications of being listed as a witness. While there are technical differences between loan guarantor and witness, some banks use such words interchangeably to their advantage. It is therefore important to have a clear understanding of what role a witness is supposed to play and what their liabilities are.
Customers must therefore pay a critical attention to the four major clauses in bank loan agreement before signing any document.
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