Last updated 12 Nov 2026
A Key Fact Statement (KFS) is a standard one-page summary that a lender gives you before you sign a loan agreement. It states the loan amount, the repayment schedule, every charge, the APR, the lender's grievance contact and, for loans given through digital channels, your right to exit within a cooling-off period. The APR, or annual percentage rate, is the number to compare across offers because it brings the interest and the certain fees into one yearly figure. A low interest rate with large fees can cost more than a higher rate with small fees. The APR shows that.
This guide goes through the KFS line by line, explains how APR differs from the interest rate, and gives you a method for comparing offers. It is the document to ask for from every lender, whichever loan you choose.
What a Key Fact Statement is for
Before the KFS, the true cost of a loan was spread across a rate card, a sanction letter and a long agreement. The KFS puts the facts that matter in one place and in a fixed order, so that you can compare lender to lender. Regulated lenders are directed by the Reserve Bank of India to provide it for retail and small-business loans before the contract is signed, and to give it in a language you understand. The lender is responsible for what it says. If something in the KFS differs from what you were told, the KFS is the document to rely on and to question.
What the KFS shows
The main parts of a Key Fact Statement
| Part | What it tells you | What to check |
|---|---|---|
| Loan amount and disbursal | How much is sanctioned and how much reaches your bank account after deductions | Is the amount paid to you equal to what you asked for? |
| Interest rate and type | The rate, and whether it is fixed or floating, and flat or reducing balance | Is it reducing balance? When does a floating rate reset? |
| Tenure and repayment schedule | Number of instalments, EMI amount and due dates | Does the EMI fit your budget with a margin? |
| Fees and charges | Processing fee, insurance, valuation, documentation and other items, in rupees | Is every charge named and in rupees? |
| APR | The yearly cost of the loan including the certain charges | How does it compare with other offers? |
| Contingent charges | Penal charges, part-payment, foreclosure and other charges that apply only in some cases | What does each cost and when does it apply? |
| Cooling-off period | The days in which you can exit by repaying the principal and proportionate interest | How many days, and what is the process? |
| Recovery and grievance | Who handles recovery and complaints, and how to reach them | Do you have the grievance officer's contact details? |
| Lending service provider | Whether a platform or agent is involved and who it is | Is the lender clearly named? |
Interest rate and APR: not the same thing
The interest rate is the price of the money. The APR is the price of the whole loan. If a lender charges a processing fee and insurance on top of interest, the APR is higher than the interest rate, because the fees reduce the amount you actually receive while the interest is worked out on the full loan.
Interest rate and APR compared
| Point | Interest rate | APR |
|---|---|---|
| What it covers | Interest only | Interest and the fees that are certain to apply |
| Where you see it | Advertisements, rate cards, the KFS | The KFS |
| Use it to | Understand how interest is worked out | Compare offers from different lenders |
| Can two loans with the same rate have different values? | Yes, the rate can be equal | Yes, the APR differs if the fees differ |
| Does it include penal charges? | No | Usually not; contingent charges are shown separately |
For the difference between a flat and a reducing-balance rate, read Flat vs reducing interest rate. For how floating rates move, read Repo rate, EBLR and MCLR explained.
A worked example of why APR matters
Imagine two offers for a ₹5,00,000 loan over the same tenure. The figures below are round numbers for arithmetic and do not name any rate.
Two offers compared (illustrative)
| Item | Offer A | Offer B |
|---|---|---|
| Quoted interest rate | Lower than B | Higher than A |
| Processing fee | ₹25,000 | ₹5,000 |
| Insurance added to the loan | ₹15,000 | ₹0 |
| Amount credited to your account | ₹4,60,000 | ₹4,95,000 |
| Interest worked out on | ₹5,00,000 | ₹5,00,000 |
| What the APR shows | A higher cost than the headline rate suggests | Closer to the headline rate |
In Offer A the lender takes ₹40,000 in fees and insurance from the sanction, so you receive ₹4,60,000 but pay interest on ₹5,00,000. That lifts the APR above the quoted rate. Offer B has a higher rate but little else, so its APR is closer to the rate. Depending on the numbers, B can be cheaper overall. You cannot tell from the rate alone. Ask for the APR and the total amount payable for each offer.
How to read the fee section
- Processing fee: set by the lender, often taken at sanction, usually a share of the loan. Ask whether it is refunded if you decline after sanction.
- Insurance: ask if it is optional. A lender should say so in the KFS.
- Documentation, valuation and legal charges: common on secured loans; ask who pays whom.
- Stamp duty and registration: government charges, usually paid by you.
- GST on fees: a tax on the lender's fee, not on the principal. See the glossary entry.
- Penal charges: apply only if you pay late; the KFS should say how they are worked out.
- Part-payment and foreclosure charges: ask whether they apply to your loan type and rate type.
See also processing fee, penal charges, GST on loan charges and foreclosure. A lender should not charge you for something that is not in the KFS or the agreement without your consent. If it does, ask for the clause in writing.
The cooling-off period
For loans given through digital channels, RBI directions require a cooling-off period, set by each lender and not shorter than one day. During it you can exit the loan by repaying the principal and the proportionate APR (the interest for the days you used the money). The lender may keep a reasonable one-time processing fee if it was disclosed upfront in the KFS. The KFS must state how long the period is. Write down the last day of your window.
How to compare offers with the KFS
- Ask each lender for its KFS in writing before you accept anything.
- Put the loan amount, the amount credited, the APR, the EMI, the tenure and the total payable side by side.
- Check whether the rate is flat or reducing balance, fixed or floating.
- Add up every fee in rupees. Check that none is hidden in a bundle or an add-on.
- Check contingent charges: part-payment, foreclosure and penal charges.
- Choose on the APR and the total payable first, then on service and other terms.
LOANZ 360 is a loan aggregator, not a lender. Offers shown through LOANZ 360 are decided and priced by the lender, and each should come with its own KFS. Where several lenders match, you see all the matching offers and may choose where to apply. See How we rank offers and Digital lending disclosures.
Frequently asked questions
Do all lenders have to give a Key Fact Statement?
Regulated banks and non-banking finance companies are directed to give one for retail and small-business loans before the loan contract is signed. If a lender does not give you one, ask for it, and raise the matter with its grievance officer if it refuses.
What is the difference between APR and the interest rate?
The interest rate is the price of borrowing the money. The APR also includes the fees that are certain to apply, shown as one yearly percentage. For comparison, use the APR.
Does the APR include penal charges?
Usually not. Penal and other charges that apply only in some cases are listed separately in the KFS, so check them as well as the APR.
Can I change my mind after I get the KFS?
Yes. You can decline before you sign. For digital loans you also have a cooling-off period after disbursal, set by the lender, during which you can exit by repaying the principal and proportionate interest.
What if a charge on my statement is not in the KFS?
Ask the lender in writing to point to the clause. A charge that is not in the KFS or agreement, and that you did not agree to, is grounds for a complaint. See the borrower rights guide for the steps.
Is the KFS the same as the sanction letter?
No. The sanction letter confirms the lender will lend on certain terms. The KFS is the standard summary of the cost and rights for comparison. Both should agree. If they do not, ask for a correction before you sign.
Related reading: Borrower rights and how to raise a complaint, Flat vs reducing interest rate, Repo rate, EBLR and MCLR explained, Loan prepayment and foreclosure, Digital lending safety, Key Fact Statement, APR, Cooling-off period, Digital lending disclosures, EMI calculator.