Before accepting an NBFC loan, confirm which regulated lender is making it, calculate the full cost, and compare the offer with the Key Facts Statement (KFS), sanction letter and complete loan agreement. Check the repayment schedule, penalties, prepayment rules, recovery process and complaint contacts before signing or allowing disbursal.
How do I know an NBFC loan app is genuine?
An app or digital platform may arrange a loan without being the lender. Identify the bank or NBFC that will actually lend and service it, and make sure the same lender is named in the offer documents. The Reserve Bank of India (RBI) says digital platforms acting for regulated lenders must disclose the lender’s name; the sanction letter should be issued on the lender’s letterhead before the loan agreement is executed. See the RBI digital lending directions.
- Look for the NBFC’s legal name in the app or platform disclosures, sanction letter and agreement.
- Check that the lender identified in the paperwork is the one responsible for the loan, not merely the app or intermediary.
- If you cannot establish who is lending, or the documents name different entities without explaining their roles, ask the lender to clarify before signing.
What is the APR on an NBFC loan?
APR, or annual percentage rate, expresses the annual cost of credit, including interest and associated charges. It is more useful than an advertised interest rate alone when comparing borrowing costs. RBI’s digital lending directions require APR disclosure in the KFS for digital loans; RBI’s NBFC Fair Practices Code also addresses transparent disclosure of rates and charges.
Ask for the total amount you will repay, not just the instalment or headline rate. Include fees and other charges in your comparison, and check what late payment, part-payment or foreclosure could cost. No single APR or fee applies to every NBFC loan, so use the figures in your own offer.
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Compare offers on the same basis
If you have more than one offer, compare them for the same loan amount and repayment period. A lower instalment may reflect a longer term rather than a lower total cost.
| What to compare | What to check |
|---|---|
| Cost | APR or annualised interest, fees, total repayment and late-payment charges. |
| Repayment fit | Instalment amount, due dates, number of instalments, loan term, rate-reset terms and prepayment or foreclosure conditions. |
| Contract clarity | Whether the offer, KFS where applicable, sanction letter, agreement and cited enclosures agree, and whether you understand the language. |
| Servicing and recourse | The regulated lender’s identity, recovery process, grievance officer and applicable complaint escalation route. |
What should be in a loan KFS?
For a digital loan, the regulated lender must give you a standardized KFS before you execute the contract. Read it before signing, rather than treating it as a formality. RBI’s digital lending directions specify disclosures including APR, the recovery mechanism, grievance officer and cooling-off or look-up details.
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Check the KFS for every stated charge and compare it with the sanction letter and agreement. RBI states that fees and charges not mentioned in the KFS cannot be charged to the borrower at any stage during the loan term. If a cost or material condition appears in another document but not in the KFS, ask the lender to explain and correct the paperwork before proceeding.
What should I check in the sanction letter and agreement?
Read the complete agreement and every enclosure it refers to. The sanction letter, KFS where applicable and agreement should describe a consistent loan. RBI’s NBFC Fair Practices Code calls for clear disclosure of terms, including the annualised interest rate and its method of application.
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Outbyte Driver Updater FREEFix the driver behind crashes, sound loss and screen glitchesFind Drivers →Outbyte PC Repair FREEClear out junk files and repair common Windows errorsFree Scan →- Repayment schedule: Confirm the instalment amount, due dates, number of payments and total repayment. Find out whether the rate can reset and how a missed payment changes the amount due.
- Charges and penalties: Locate late-payment charges, penal interest or other penalties and understand when each applies. RBI guidance calls for disclosure of penal interest and written notice of changes to terms.
- Prepayment: Check the conditions and charges for part-payment or foreclosure, and whether changing the schedule is permitted.
- Security and recovery: If the loan is secured, understand the security and any repossession terms. Read the stated recovery mechanism and how the lender will contact you.
- Language: Ask for explanations and communications in a language you understand. RBI’s Fair Practices Code says borrower communications should be in the vernacular or a language understood by the borrower.
Do not sign if a term is unclear or if important figures differ across documents. Ask the lender for a written explanation or corrected documents before accepting the loan.
What should I save before the loan is disbursed?
Keep copies of the KFS, sanction letter, full agreement and enclosures, repayment schedule, and relevant app, email or SMS messages. Under the RBI digital lending directions, digitally signed loan documents are to be sent to the borrower through registered and verified email or SMS after execution. Keep those messages with your copies so you can refer to the terms and payment dates later.
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How do I complain about an NBFC loan?
First use the NBFC’s complaint process and retain your complaint and the lender’s response. Note the grievance officer and contact details stated in the KFS or loan documents. For complaints about digital lending, the RBI direction provides for escalation through the RBI’s Complaint Management System (CMS) under the applicable Integrated Ombudsman Scheme if the complaint remains unresolved after the stipulated period, described in that direction as currently 30 days. Check the current RBI Integrated Ombudsman Scheme FAQ for coverage, eligibility and filing instructions; the FAQ was updated July 1, 2026, when the Reserve Bank–Integrated Ombudsman Scheme, 2026 took effect and replaced the 2021 scheme. The route depends on the regulated entity and the complaint, so verify that your case is eligible before filing.
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