In today’s fast-paced lifestyle, people often end up spending more than their monthly income due to which they fall into a debt trap. Being indebted to friends, family or even credit card debt makes one ineligible to cater to a financial emergency. At such times, getting a personal loan is a good way to meet any type of financial requirement. Be it requiring the money to pay off credit card debt or renovating the house or even catering to a medical emergency, a personal loan can be used for any purpose. However, when getting a personal loan, you must keep in mind certain things when applying for a personal loan.
Here is a list of dos and don’ts you need to follow:
Do: Compare and research
Do not fall for the first offer that you receive via email or SMS. Look for the best personal loan deal online by comparing and researching on the interest rates and other aspects. Though it is very convenient to get a loan from the bank you have an existing relationship with, but doing a bit of research online is wise as various NBFCs, online lenders and direct selling agents can help you get the best deal.
Do: Calculate the interest rate
When availing a personal loan, check if you are getting the loan at floating or fixed rate. Fixed interest rate ensures that the EMI of the loan stays the same throughout the loan tenure, whereas with the floating rate the interest rate varies depending on the market scenario. Therefore, always calculate the overall interest you would be paying towards the loan and choose the interest rate type that suits your financial plan.
Do: Check your personal loan eligibility
To ensure your loan application is not rejected, you can check your personal loan eligibility online using a personal loan eligibility calculator. The calculator helps you determine your loan eligibility by taking into account different aspects such as your monthly income, employer name, location and other details. Using a personal loan eligibility calculator helps you get an idea of the loan amount you are eligible to receive.
Do: Check the foreclosure charges
In the case of early repayment or part payment of the loan, banks charge a fee that is known as foreclosure charges. These charges are levied as lenders miss out on earning the interest they would have earned from the deal. Choose a lender that has low or no foreclosure charges at all.
Do- Check on the lender’s reputation
When applying for a personal loan, it is imperative that you check on the lender’s online reputation as it helps you get an idea of the customer service provided by them. Read reviews online to get an idea to ensure you are dealing with the best loan provider in India.
Don’t: Ignore your credit score
Ensure you check your credit score as it determines your creditworthiness. Having a low credit score can lead to instant rejection of your application, whereas, having a high score can help you get the loan at a low-interest rate. The score ranges from 300-900 with 900 being the highest and 300 the lowest. Checking your credit score before applying for a loan is imperative as loan rejection can further lead to the decline of the score.
Don’t: Make too many applications
Looking for best personal loan interest rates online can be a wise thing to do. But making too many applications can dent your credit score. Approaching too many lenders reflects your credit hungry behavior that can lead to loan rejection.
A personal loan can bail you out from financial emergencies that can otherwise spell disaster. Follow the above dos and don’ts when applying for a personal loan in India.