People need money to address their financial concerns on time. While some might be regular ones like going for a vacation with family, home renovation, etc. others might erupt out of blue such as urgent medical attention, cover up wedding expenses, etc. One may have to borrow money if they don’t have sufficient funds available with them. Borrowing from friends or relative is not possible every time, and loan sharks would charge exorbitant personal loan interest rates. A personal would help you tide over the financial situation. Today, top banks and financial institutes provide personal loans at attractive interest rates and flexible repayment tenure of 1-5 years.
You can compare quotes amongst the top lenders on aggregate sites in terms of interest rates, principal amount, loan tenure, EMI, etc. and take a wise call. However, before you apply for a personal loan, you must follow these simple rules.
Avail what you need
You should only borrow what is required. Many times, since borrowers are qualified for the higher loan amount they tend to take it. However, at the end of the day, it would only add up to your interest rate, and you would have to pay high loan EMIs. Don’t borrow to make any investments. Borrowing rates are naturally higher than your returns. So, it won’t make a sense to borrow money for investments.
There are many aggregate sites that have a tie-up with top banks and financial institutes in India. You can compare quotes of these lenders, and choose a suitable deal as per affordability and requirements. Once you key in a few details online such as name, income source, organization details, financial obligation, etc. they would come up with the best match for you. You can then apply for a personal loan online.
Check Loan tenure
The lending institute offers a loan for higher tenure. It helps the borrower to qualify for higher income. But the fact won’t change that longer tenure results in escalating costs, and you would end up paying higher personal loan interest rates. If you plan to prepay, it would further hike the loan costs. So, try to repay the loan at the earliest, and keep short loan tenure.
Your Credit report
It would be wise to check your credit report before you apply for a personal loan. Your credit profile is the deciding factor for your loan approval. A higher credit score would help you to negotiate for better personal loan interest rates and get higher loan limits. An ideal score that would help you to get easy loan approval will be 700 and above.
Check your monthly installments
Your monthly installment should not go beyond 30-40% of your net take home salary. Basically, lenders see if you’re able to make easy loan repayments or not. So you need to work out plan from your end and borrow an amount where you would be able to serve the EMIs without any interruption. Else it will impact your credit score, and you won’t be able to avail a loan in the future.
Read Fine print
Like it is said, “Prevention is better than cure” it would be wise if you check on processing the charge, pre-closure charges, and other additional charges, etc. before you sign the personal loan agreement. Otherwise, it will escalate the loan costs, and burn a big hole in your pockets.