Personal Loans helps one meet with demands of immediate funds. With Internet available at the helm of every day to day usage, it has become quite convenient for people to avail Personal Loan, with just few clicks. Whether it is a medical exigency, or you are planning to set up your own business, a long due vacation to be planned, remodeling of your home, wedding preparation, or consolidating all debts, Personal loan is the best option to go ahead with when faced with scenarios of financial crunch.
Though Personal loans is considered to be the best option to go for, during monetary shortfall, it is advisable to evaluate few points before planning to avail Personal Loans. Since Personal loans comes with heavy interest rates, it is wiser to go for that only when you are in urgent need of money. Personal loan is an unsecured loan with no collaterals attached to it. Hence evaluating critically, all the pros and cons becomes necessary.
Are you the one who wants to go for personal loan?
Then this article will, guide you to consider few points before availing personal loan.
1. Evaluate your eligibility- The most important factors to consider while applying for Personal loan is to find out if you are meeting the eligibility criteria or not. These include your age, citizenship, stable income and your Credit score. All the lenders are majorly concerned about the repayment capability. Your credit score majorly plays the role in successfully providing you with the approval. Make sure, you pay all the debts, EMIs keeping the record clear. Keep an eye on your CIBIL score, and keep updating frequently.
2. Amount to be borrowed and at what cost- Before you go ahead with the documentation part, with the chosen lender of your choice, you will have to question yourself. How much is the requirement and how much you can afford to repay? Your debt to income ratio will be the major driving factor in answering your query to yourself.
Keeping the ratio to 30% will work good for you, and will handle your other obligations. If the requirement of the loan amount is higher, check for other income sources which will reduce the ratio. If upgrading income is not workable, consider reducing the amount.
3. Considering repayment options – Chalk out your repayment options wisely. Filing application from the comfort of your home with just few clicks has definitely lessened doing rounds of banks.
All lenders at the time of granting a loan, look out for the income sources, to understand the borrower’s capacity to repay the amount borrowed. Before availing for the loan, it is, therefore, advisable to access yourself whether you will be able to repay the amount borrowed on time or not?
All the lenders in the market have come up with EMI calculator on their respective websites. You can check various options and go about the one, which will suit your repayment capability. Going for the shortest possible tenor has its advantages of reducing the amount overall. Longer the tenor decreases the EMIs but overall increases the net amount you will have to pay over the term as interest.
The amount which you will be paying for EMIs will be calculated on the basis of the loan value, tenure of the loan, rate of interest. The actual applicable interest rates vary according to the credit score of the individual,company you work for gets you the leverage of reducing the rate of interest to some extent, loan amount and tenure and finally on the discretion of the bank.
4.Lenders offering the deals- Due to tough competition in the market, possibility of getting the best deals are on high. The eligibility of your personal loan varies as per your credit scores. A score of 750 or above should make you eligible for negotiating best interest rates for yourself. Look for the ones offering best USP’s and go ahead with them wisely.
Analyze which lender is offering lowest pre-payment charges. You should be aware that banks charge a fee, if you are closing the loan early. This process is generally followed by lenders as it prevents them from earning the interest rates as it was expected, when the application for a loan was pitched.
5. Analyzing Fine Print – There are other legal charges, which you might miss to understand before availing the loan. To save yourself time, while opting for loans online, you might go ahead clicking and agreeing to all the check boxes as you proceed ahead. However, it is of great importance to go through in details about the various fore closure, pre-payment, late fee, loan cancellation, EMI bounce fees are included. To save yourself later against all such fees and charges, give yourself the time to go through each and every detail minutely.
Now that you are aware what points are necessary to understand before availing for Personal loan, the hassle and inconvenience will be avoided to a large extent.