We rely on loans to fund our personal needs and fuel business growth. While borrowing money, transparency and clear communication is essential for the customers. HDBFS introduces Key Fact Statement (KFS) that is aimed at enhancing customer’s understanding of terms of the loan and ensures 100% transparency. Let’s learn more about KFS - what it is, why it’s essential, and how it benefits the borrower.

What Is the Key Fact Statement (KFS)?

A Key Fact Statement is a document that clearly explains loan terms. It has key information regarding a loan agreement, including the all-in-cost of the loan, in a simple and easy-to-understand format. This initiative equips customers to make well-informed decisions.

What Does the KFS Contain?

Here’s what you’ll find in your KFS document

• Loan Amount: The total amount of money being borrowed.
• Terms and conditions: Specific conditions associated with the loan, such as collateral requirements or special clauses.
• Total repayment amount: The total amount to be repaid over the life of the loan, including interest and fees.
• Interest rate: The percentage charged on the loan amount, which can be fixed or variable.
• All-Inclusive Annual Percentage Rate (APR): The APR shows the total cost of the loan, including interest and any additional fees. It gives you a clear picture of the loan’s actual cost over its term.
• Repayment schedule: Details on the frequency and amount of each payment, including the loan tenure.
• Amortisation Schedule: It provides a detailed breakdown of how the loan will be repaid over time, showing the principal and interest portions of each instalment.
• Fees and Charges: Any fees or charges, including those from third-party service providers, such as insurance or legal fees, must be clearly mentioned.
• Grievance Redressal Mechanism: Information on how to file complaints or raise concerns with the lender if you feel something is amiss.
• Foreclosure Terms: If you want to repay the loan early, the KFS will list any foreclosure charges or penalties.
• Contact information: Details of the lender's contact information for any queries or concerns.

How Does the KFS Benefit Borrowers?

Greater Transparency: The KFS ensures that borrowers are fully aware of all costs before taking out a loan. So, borrowers cannot be surprised by hidden fees or unexpected charges later.

Easier Decision-Making: Since the KFS includes everything from the APR to foreclosure terms, borrowers can easily compare different loan offers and choose the one that best suits their needs.

Language: KFS can be provided in multiple languages that the customer understands. KFS in local languages helps customers better understand loan terms, improving transparency, trust and enabling informed decision making

Know Your Rights: Lenders cannot charge you for anything that is not clearly mentioned in the KFS without your approval.

By offering essential information in a straightforward and easily understandable format, the KFS equips customers to make well-informed financial decisions. This document plays a crucial role in the borrowing process, presenting a concise summary of the loan’s critical details. It is vital to carefully review the KFS before committing to a loan, as it serves as your guide to comprehending and managing your financial responsibilities effectively.