New Delhi, March 13 -- Personal loans are becoming increasingly popular in India as they are easily available and convenient. Prominent lending institutions such as: HDFC Bank, ICICI Bank, Kotak Bank, Bajaj Finance, CreditAccess Grameen among others are rapidly scaling up loan distribution services.

Due to the rapid distribution of loans we are also witnessing a rise in defaults, errors and difficulties in repayment across the entire financial sector. There are also several other important aspects that are missed by everyday borrowers.

Most of the borrowers do not think about one vital point: loan prepayment penalties. These charges are levied on borrowers when they wish to pay the loan back early, either partially or fully. In this art...