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Tata Capital > Blog > Shubh Chintak > Understanding the loan statement

Shubh Chintak

Understanding the loan statement

Understanding the loan statement

Loan statements are like financial roadmaps. They guide borrowers through the journey of repaying their loans. Whether you’ve taken out a mortgage, a personal loan, an auto loan, or any other type of borrowing, understanding what a loan statement is will help you manage your finances responsibly. 

However, a loan account statement, sometimes also referred to as a loan EMI statement, can often be overwhelming and confusing for many borrowers. They are filled with numbers, terminology, and financial jargon that might seem like a foreign language. Understanding a loan account statement empowers you to make informed financial decisions and track your loan payments.

What is a loan statement? Meaning & purpose 

A loan account statement is a comprehensive document that outlines all essential details of your loan. It serves as a financial snapshot of your loan terms and includes key figures, payments, and other important information. 

A simple loan statement check keeps you informed about the status of your loan. It is a communication tool between you and your lender, ensuring transparency and accountability throughout the long term. Here are some key components of a loan statement:

  • Loan information such as the loan amount, interest rate, type of loan, and tenure.
  • Monthly payment breakdown, including the principal amount, interest charges, and additional costs and fees.
  • Your payment history, outstanding balance, and due dates.

Now that you know what a loan statement is, it is time to understand how you can read one.

How to read a loan statement: Key components & details 

Reading and interpreting your loan statement can help you understand the health of your loan and ensure that you’re on track with your payments. Here’s a step-by-step guide on how to read a loan statement effectively:

Step 1: Review borrower information

Start by verifying your personal information, including your name, contact details, and loan account number. Make sure that all information is accurate.

Step 2: Examine loan details

Check the loan details section to review key information like:

-Loan amount: Confirm the initial amount borrowed.

-Interest rate: Note the interest rate charged.

-Type of interest: Identify whether it’s a fixed-rate or flexible-rate loan.

-Loan tenure: Understand the duration of your loan.

Step 3: Analyze the payment breakdown

Pay attention to the payment breakdown on the loan EMI statement, which outlines your monthly payment:

-Principal: The part of your EMI that goes toward reducing your loan balance.

-Interest: The applicable interest rate on the principal amount.

-Additional costs: Any extra fees or charges levied by the lender.

Step 4: Review transaction history

Examine the transaction history section, which records all financial activity related to your loan:

-Payment date: Check the date of each payment.

-Payment amount: Verify the amount paid each month.

-Principal and interest allocation: See how each payment is divided between the principal amount and interest charges.

Step 5: Understand interest calculation

If your loan statement includes an interest calculation section, take note of the interest rate and calculation method. This will help you understand how interest accrues on your loan balance.

Step 6: Review your loan statement regularly

Regularly compare your current loan statement with previous statements to monitor changes in your loan balance and interest paid. If you notice any errors, discrepancies, or unexpected changes, contact your lender immediately to resolve the issue.

How to apply for and download your loan statement online?

Here are the steps for a quick loan statement download:

– To submit a loan statement application, first visit the website or mobile app of the lender.

– Log in to your account using your registered mobile number or email address. You will receive a One-Time Password (OTP), which you need to enter to verify your identity.

– Once you are logged in, go to the loans section. This area shows all your current and past loans in one place.

– Select the loan for which you want to submit a loan statement application.

– After opening the loan details, select loan statement download.

The loan statement download is usually completed in a few seconds, after which you can view, save, or print it.

Why is it important to check & understand your loan account statement?

A quick loan statement check can provide you with complete transparency about your loan, including the terms, payment breakdown, and financial transactions. This makes it easier to understand exactly what you are paying for and how your payments are allocated. 

Moreover, regularly reviewing your loan statement allows you to verify the accuracy of the information. This includes confirming that your personal details are correct and that all payments and adjustments are accurately recorded. 

Understanding your loan statement is a critical component of your long-term financial health. Periodic loan statement checks can help you manage your debt responsibly, avoid financial surprises, and work toward achieving your financial goals.

Top mistakes to avoid when checking your loan statement

Conducting a loan statement check? Here’s what you must avoid:

– Not paying attention to the fees listed on your statement: Hidden or extra charges can increase the amount you owe.

– Not reviewing your past transaction history: Statements can sometimes contain errors, so it is important to double-check everything.

– Not verifying the interest rate: Make sure the rate shown matches what was agreed to in your loan terms. 

– Not checking your loan EMI statement regularly: Skipping reviews can lead to confusion and make it harder to catch issues early.

Keep your financial health in check with a loan statement

Understanding your loan statement helps you take control of your financial health. It allows you to manage your debt wisely, prevent financial pitfalls, and achieve your financial goals.

So, don’t view your loan statement as a daunting piece of paper or a digital record. Think of it as a valuable document that empowers you to navigate the complex world of loans and stay on top of your finances.

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FAQs

How can I download my loan account statement online?

You can visit your bank or financial institution’s app or website, log in to your account, and submit a loan statement application for the relevant loan. Most banks provide the statement within a few minutes, which you can download or view instantly.

What is included in a typical loan statement or EMI statement?

A typical loan EMI statement includes details such as the loan amount, interest rate, and tenure. It also shows a monthly payment breakdown, your payment history, the outstanding balance, and upcoming due dates.

How do I check for errors or wrong charges on my loan statement?

You should double-check all entries and compare them with your loan sanction documents. It also helps to request a loan EMI statement from time to time and review it carefully to make sure everything is in order. Staying vigilant can help you catch mistakes early.  

Can I get my loan statement by visiting the bank branch?

Yes, you can visit your bank and submit a request for your loan account statement. Be sure to carry a valid identity proof. However, submitting a loan statement application online is usually quicker and more convenient.

How often should I review my loan account statement?

You can review your loan statement monthly or quarterly to stay updated on your loan progress and repayments. 

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