Gone are the days when loans and debts were considered as sins. These days the credit worth of a person is defined by his loan repaying capacity. Using credit is indeed a part of lifestyle today. Almost all the banks and financial institutions are ready to offer personal loans based on different credit requirement.
The loans are categorized in various ways and situation. One may avail personal loans to manage fund like marriage, education, medical expenses, and renovation of your home, to consolidate your debt and much more. The most exciting part is it does not require any collateral. However before you plan to avail personal loan, keep following 5 points in your mind:
Avail personal loan only for emergencies: Be very careful while taking a loan and restrict it to only as much needed. The lender considering your income and account balance might at times offer more to attract. Do not get carried out with the high amount as the weighty EMI might make your life miserable at the time of repayment of the loan.
1. Have a detailed research on interest rates:
Being all purpose unsecured loans, the rate of interest on personal loans could be very high. However several factors such as your job, employer, salary package and credit history could play a significant role in securing a competitive personal loan interest rate. Other factors such as how many loans you have and your payment history would also play an important role. So, do a detailed research and take a wise decision after comparing the deal with the cheapest deals available in the market.
2. Multiple attempts lead nowhere:
To meet an emergency, we generally tend to apply for loans in multiple banks at the same time. Keep in mind that every application for personal loan submitted will extract your credit report to know your CIBIL score and rating. By submitting a number of applications within a short period, lenders would suspect that you are creeping around for a loan. This will give them a ground to refuse your loan application.
So make sure while you search for loans, you do not apply to two lenders at the same time and refrain from any bank queries which points towards a credit hungry behaviour.
3. Knowing about the procedure thoroughly is also important:
Choosing the right lender or rather the best bank for your personal loan is truly essential. There are various conditions and rules that are mentioned in the loan document. You should be careful to verify the clauses. It is the borrower’s responsibility to go through each point of the document carefully before taking the loan. In case of any clarifications do not take it as you understood. It is advised to speak with a representative about the terms and conditions clearly to avoid future compilations.
4. Focus on the foreclosure clause.
Banks and financial institutions providing offering personal loans do not acknowledge partial repayment of the loan. Banks want the borrower to carry on paying their equated monthly instalment or EMI for the complete tenure. It is therefore essential to review your bank charges for prepayment particularly if you are planning to give back your loan in lump sum at some point in time in the future.
5. Avail only for the amount you strictly need.
Do not take loans because banks are offering. Banks offer extra loans based on your repayment history. Additional loan means additional liability on your shoulders for larger period. Banks always promote add-ons on personal loans so make sure you utilize it if and only if required or it will add cost of loan.
Besides, collect all the pertinent information from the internet or your local area branch before you finalise the deal. It is suggested to the compare them at home to select the best loan. When you finally go out to approach for the loan, you should be well prepared for what all you seek.
Being well informed you can compare rates from various vetted lenders and find out your lowest eligible rate and grab the best deal with no waste of time. After choosing the best lender and the best deal you can enjoy peace of mind!