By BillCut
Last updated: 31 October 2026
How to choose a personal loan offer comes down to one habit: compare the full cost, not only the monthly EMI. Use the same loan amount and tenure for every offer, then read the fees, the annual percentage rate and the rules on exit. The checklist below uses RBI disclosure rules so you know what lenders must show you.
Why does the EMI alone not tell you enough?
A low EMI can hide a long tenure or extra charges. RBI defines the annual percentage rate, or APR, as the annual cost of credit to the borrower, which includes interest rate and all other charges. So APR is the fairer number to compare, rather than the interest rate alone.
What should you ask for before you accept?
Under RBI’s Key Facts Statement rules, lenders must give every prospective borrower a KFS before the loan contract is executed. The KFS has to include an APR computation sheet and the amortisation schedule. These rules apply to new retail and MSME term loans sanctioned on or after 1 October 2024. Ask for the KFS from every lender and place them side by side.
What is the seven point checklist?
- APR: compare it across offers for the same amount and tenure.
- Fees: check processing fees and any charge for insurance or third party services, which RBI says must be shown separately in the KFS.
- Tenure: a longer tenure lowers the EMI but usually raises the total interest paid.
- Total repayment: add up every EMI in the amortisation schedule.
- Prepayment: ask what happens if you repay early.
- Penal charges: ask what is charged on a late EMI.
- Exit window: ask about the cooling off period.
How can you compare two offers side by side?
Illustrative example with round, made up numbers, not a BillCut offer. Both offers are for the same loan amount and tenure.
| Item | Offer A | Offer B |
|---|---|---|
| Stated interest rate | Lower | Higher |
| Processing and other fees | Higher | Lower |
| APR | Check KFS | Check KFS |
| Total repayment | Check schedule | Check schedule |
Offer A looks cheaper on interest alone, but higher fees can lift its APR above Offer B. Only the KFS figures settle it. Never rely on a headline rate.
What do the rules say about fees and exit?
RBI says that any fees or charges not mentioned in the KFS cannot be charged during the loan term without the borrower’s explicit consent. For digital loans, RBI directions give the borrower an explicit option to exit by paying the principal and the proportionate APR without penalty during a cooling off period. The lender sets that period, and it cannot be less than one day. A one time processing fee may be kept if disclosed upfront.
For EMI based floating rate personal loans, RBI says borrowers must be able to prepay, either in part or in full, at any point during the tenor, with charges as per existing instructions. Ask your lender what applies to your loan.
Does your credit profile change the offers?
Yes. CIBIL says lenders look at loan amount compared to your income, loan tenure and your credit profile when setting rates. It also warns that too many loan enquiries may hurt your score, so compare using KFS documents and lender pages rather than filing many applications at once. Our guides on personal loan eligibility and why offers drop suddenly explain more.
What should you avoid?
Read our notes on personal loan traps and why tenure choice matters. Borrow only what you can repay from your regular income. A simple test is to add the new EMI to your existing EMIs and check that the total still leaves room for rent, food and savings. Keep the KFS, sanction letter and agreement in one folder, so you can check any later charge against them.
Check your options with BillCut
How BillCut can help
BillCut is a balance transfer and debt reduction platform. It works with lending partners to help eligible borrowers move high interest dues, such as credit card balances and personal loan EMIs, into one structured EMI. BillCut earns from helping borrowers refinance, so it has an interest in this option. Approval and terms depend on the partner lender.
Frequently asked questions
What is APR on a personal loan?
RBI defines it as the annual cost of credit, which includes the interest rate and all other charges.
What is a Key Facts Statement?
A summary every prospective borrower must get before the contract is signed. It includes an APR sheet and the repayment schedule.
Can a lender add charges later?
RBI says fees not mentioned in the KFS cannot be charged during the term without your explicit consent.
Should I compare only interest rates?
No. Compare APR, fees, tenure and total repayment for the same loan amount.
Can I exit a digital loan after taking it?
RBI directions give a cooling off option to exit by paying principal and proportionate APR without penalty. The period is set by the lender.
Do many applications hurt my score?
CIBIL says too many loan enquiries may hurt your score, so avoid applying in many places at once.
Does BillCut give me the loan?
BillCut works with lending partners. Approval and terms depend on the partner lender.
Disclaimer: This post is general information, not investment, tax or legal advice. Numbers in examples are illustrative and are not BillCut offers. Check your own loan documents and lender terms before you decide.
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