Taking a personal loan? Remember this!
Are you contemplating the option of a personal loan to kick-start your dream or to aid you in the time of need? To make an informed choice, check off these pointers before you take a personal loan.
With tailor-made loans now available for salaried and self-employed individuals that best suit their requirements, the idea of taking a personal loan is a smart one. Whether your desire to take a personal loan is to fund a wedding or a family holiday, pay for home improvement or a medical emergency, the first thing most of us worry about is the application procedure. However, personal loans are rather simple to apply for. When it comes to other personal loan FAQs, make sure to read all the fine print on any lender’s website to be informed of the nitty-gritties. To make sure you’re taking a right step and making an informed decision, here are a few tips to keep in mind before applying for a personal loan.
The interest rate being charged
If you’re wondering how to choose a lender best suited for your personal loan needs, the interest rate should be one of the main criteria. Different lenders offer different rates of interest. Make sure to compare options before you pick a lender. Interest rate charged on your loan can be a flat interest rate or a reducing balance interest rate. Even though flat interest rates are offered at a lower rate, it is not necessarily beneficial in the long run. On the other hand, reducing balance interest rate ideally reduces the interest paid as the loan gets repaid. Thus, you must take into account the pros and cons of the different options before going ahead with taking the personal loan.
Understand what you're being sold
It is very important to understand what the personal loan agreement or contract says. Sometimes lenders try selling an additional product with the loan. If overlooked, the loan amount is compromised on. For example, lenders try to sell insurance with the loan. On doing so, they deduct insurance premium on the loan amount granted. To prevent falling prey to such offers, you must always go through the agreement carefully and not skip clauses or overlook information that you may not understand.
Keep a check on your credit score
Checking your credit score before applying for a loan is important. A low credit score is a bad reflection of your financial health. It may thus lead to your loan application getting rejected or even affect the rate of interest you are being charged. Lenders charge you a higher rate of interest if you have a bad credit score. A simple way to increase your credit worthiness is by paying off unsettled bills from the past.
To check if you’re eligible to take a personal loan, click here:
Account for all the costs
Contrary to popular belief, interest is not the only cost borne when taking a loan. The process of taking a personal loan includes various other costs too. A processing fee is charged most often when a loan is sanctioned. It is either a fixed amount or a small percentage of the loan amount. If you fail to pay your monthly instalment or meet payment dates, a heavy fine is levied. Thus it is important to take into account the penalty fee while calculating the costs of taking a loan.
Reason out the decision
Before taking a loan, it is a good idea to reason out the decision. If the decision is taken in haste, you may later regret the same. Ask yourself if you need the loan. Another important question to answer is if you can repay the loan. Do not take a loan of more than the amount that you require. While lenders try to sell you the amount that you’re eligible for, stick to asking for only the amount that you actually require. Make sure you can repay the monthly EMIs as not doing so will result in a heavy penalty, which in turn lowers your credit score. Taking a loan to invest in the stock market or other investments that are a gamble is not a good idea. Take a loan to meet expenses or to make investments that are sure to yield returns in the future.
By opting for a personal loan from Bajaj Finserv you can get instant approval in just 5 minutes and disbursal in your bank within 72 hours! Another feature that makes paying back the loan easier is that you can prepay the loan with idle funds at no extra cost and you can save on interest costs as it is payable only on the utilised loan amount. To know more about Bajaj Finserv’s Personal Loan offering, click here.