What is the cooling-off period in a loan?

Short answer

The cooling-off (or look-up) period is a window right after a digital loan is disbursed. During it, the borrower can exit the loan by repaying the principal and the proportionate APR, with no prepayment penalty. RBI's digital lending rules require lenders to offer it. The lender's board sets the duration, but it must be at least 3 days for loans with a tenor of 7 days or more, and at least 1 day for shorter loans.

Hindi mein samjhiye

Cooling-off period loan milne ke baad ka woh samay hai jisme aap loan wapas kar sakte hain. Sirf principal aur utne dinon ka proportionate charge dena hota hai, koi penalty nahi. Yeh RBI ke digital lending niyam mein zaroori hai: 7 din ya usse lambe loan par kam se kam 3 din, aur chhote loan par kam se kam 1 din. Exact period KFS mein likha hota hai.

How to use it

RBI's Digital Lending Guidelines (2 September 2022) set the floor: the look-up period cannot be shorter than 3 days for loans with a tenor of 7 days or more, or 1 day for loans under 7 days. Lenders may offer longer. Check the look-up period stated in your Key Fact Statement. If you change your mind, contact the lender within that window and repay the principal plus the proportionate APR. The lender cannot charge a foreclosure or prepayment penalty for exits in this window.

For lenders

The loan system must compute the exit amount to the day, close the loan cleanly, and report it correctly to bureaus. Missing these is a common audit finding in digital lending operations.

Common questions

What is the cooling-off period in digital lending?

A window after disbursal when the borrower can exit the loan by repaying principal and proportionate APR without any penalty.

Is there a cooling-off period for personal loans?

For digital loans from RBI-regulated lenders, yes. It is at least 3 days for loans of 7 days' tenor or more (1 day for shorter loans), and the exact period is shown in the KFS.

Cooling off period kya hai loan mein?

Loan milne ke baad ka samay jisme bina penalty ke loan wapas kar sakte hain, sirf principal aur proportionate charge dekar.

Key Fact Statement (KFS)A Key Fact Statement (KFS) is a standard, plain-language summary of a loan that the lender must give the borrower before signing.APR (Annual Percentage Rate)APR (Annual Percentage Rate) is the total yearly cost of a loan, expressed as a percentage.FLDG / DLG (Default Loss Guarantee)FLDG (First Loss Default Guarantee) is an arrangement where a fintech or lending partner promises to absorb a lender's losses on a loan portfolio up to a set amount.

ZyroAI products for this: Loan Management System.

Written by the ZyroAI team for people building in Indian BFSI. Regulatory rules change, so for binding requirements check the current RBI, NPCI, UIDAI or relevant regulator circular. Last updated 2026-09-24.

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