Personal Loans are all-rounded financial tools that can help during financial crises and emergencies. The loan is quite flexible, which can help an individual manage both planned and unplanned expenses. All banks and financial institutions in India provide a personal loan to deserving applicants for a fixed tenure at a reasonable rate of interest. But, getting a unique loan application approved is not an easy task. There are many important factors one needs to keep in mind before applying for a personal loan. Here are the latest tips related to personal loans.
Personal loans should be taken only when they are highly needed.
Despite its many pros, personal loans are very infamous for their high rate of interest. Among all forms of loans, personal loans levy most interest on a certain lent sum. Moreover, one has to repay the loan within the fixed tenure to maintain their credibility. These are the factors that make a personal loan exclusive in comparison to its counterparts. Hence, you are advised to apply for a personal loan if and only if it’s necessary.
Additional charges must be considered.
Interest rate is a critical deciding factor for any personal loan application. It would help if you considered the interest rates before applying for any personal loan because the higher the interest rates. But few other charges need consideration as well. Personal loans levy a few additional charges on a borrowed sum of money. These additional charges can include.
- Processing fees
- Verification charges
- Penalty on late payment
- Penalty on foreclosure
You must enquire about the additional charges of the respective bank before applying for a personal loan.
Opt for a short tenure
Loan tenures are a decisive factor when applying for a personal. Many banks and financial institutions in India provide longer repayment tenure with lower EMIs, making the deal lucrative in borrowers’ eyes. But a long tenure increases the total repayment amount as well. Hence, in the long run, people tend to pay more in these installments.
Maintain a good credit score
A good credit score is an absolute must for getting approved for a personal loan or any other unsecured loan in that manner. A good credit score makes the loan applicant creditworthy. Personal Loans demand one of the highest credit scores of 750 and above. Make sure all your previous debts have been paid before applying for a new loan.
Do thorough research on the market.
There are innumerable banks and financial institutions in India that provide personal loans at a varying rate of interest. It’s maybe a confusing task to find out the best provider for your interests. The best way to find the most suitable lender is to do thorough research on the market and narrow down the options. One thing should be kept in mind, a bank that provides the lowest interest rates on personal loans is sure to attract more borrowers. Thus, they become a favorite among the borrowers and get a large number of loan applications. In such a scenario, where a bank has many applicants, it will prioritize the most eligible candidates. So, going for the cheapest provider might not always be a good decision.
Make sure you are eligible.
To get a personal loan, applicants must match the following criteria.
- You must be a citizen of India.
- You must have UID proof (Aadhaar Card).
- You must be between the age of 23 years to 55 years.
- You must have a job in any govt, private, or MNC with a minimum Rs salary. 25,000 per month.
- It would help if you had a credit score of 750 or above. People with a score between 650 to 750 may also get approved.
While making a personal loan application at any bank or NBFC, ensure you have complete knowledge of their terms and conditions. Don’t opt for a lender only because it offers a lower interest rate. Do an overall check and then select the best suit.