Living a good life is kind of expensive- and that is something that we have all learned in an easy or hard way. We might all come across occasions when we would require financial assistance. This financial assistance might be to consolidate our increasing credit card bills or even to fund that last-minute trip of ours. Although, there are a lot of banks and NBFCs (non-banking financial companies) in the market that offers us financial assistance at way lower interest rates than the ones provided by a loan shark or a traditional financier. However, opting to take a personal loan is kind of a huge decision. Therefore, we have compiled a list of a few things that you need to check before you decide to obtain a loan, and they are here as follows:
Table of Contents
Do you really need an unsecured loan?
For those of us who don’t know- a personal loan is also termed as an unsecured loan. The reason being; neither do we have to provide any sort of collateral to the financial institutions nor do we have any sort of restrictions over its use. Thus, many of us are not too worried about opting for a personal form of a loan. This is because- when we repay the borrowed sum, we have to pay it along with the interest rates charged by the financial institutions. Therefore, the first thing that you should do is ask yourself, “do I really need an unsecured loan?” or “can I solve the financial problem by pooling in my resources?”
How do I repay it?
The best thing about personal loans is that you get to make flexible repayments of the loan amount over a period of time. Thus, you can not only borrow the loan amount without any worries but also repay it without putting a dent on your budget. The financial institutions even provide us with an EMI calculator on the online websites; thus, the next thing that you need to do is- plan out your repayments to ensure that you never default on any of them.
Am I eligible for the loan amount?
A personal loan is sanctioned on the basis of the risk factor involved in lending you the money. Thus, the financial institutions have set eligibility criteria that you need to fulfil in order to avail a personal loan. Therefore, the last thing that you need to check before making your decision is to check your eligibility criteria, and it is:
- Income: The financial institutions check your income source and job stability before sanctioning the loan amount. The reason being, the financial institutions want to ensure that you will be able to make timely repayments without defaulting on any of them.
- Credit score: The financial institutions also check your credit score- your credit score is given out by CIBIL and is in the range of 300 to 900. If your score is above 700 then it is considered to be a good score.
Credit history: Your credit history is the reflection of the loan amount that you borrow. Thus, make sure that you have made timely repayments on all your borrowed loans.