8 Important Things to Consider Before Applying for a Personal Loan

In this post, i will help you to understand the essential things while you are applying for a personal loan. The market hs stuffed with too many lenders. There are chances that you may get confused with the number of offers.

There are few things an individual should follow before applying for any personal loan.

Interest Rate

It is essential to compare the multiple lenders; if you choose the loan with the higher interest rate, the impact will reflect until the last payment of the EMI. A single decimal interest rate will impact high in the total amount of interest.

Nowadays, banks are offering interest rates from 10.99%. If you are working in IT companies like Amazon, Wipro, Accenture, and cognizant, there are higher chances to get the lowest interest rates.

Banks internally categorize the companies. Most of the MNCs (Multi Nation Companies) fall under “A Category.”

If you are in that list, chances of getting the loan amount is high with the cheapest interest rates.

Processing Fees 

Lenders charge processing fees, the rates of processing fees are ranging from 1.5 -2%. Try to negotiate on processing fees and other charges. On the other hand, the processing fees vary from bank to bank. Check the multiple banks about processing fees.

Add-on Offers

Once the loan application got approved, you can receive the call from the bank executives. Most of the banks commence incentives to the executives to adding the add-on offer.

Banks charge insurance on loans; in the other hand, they will ask you to take life insurance or medical insurance. If you say yes, the amount will deduct from the loan amount, or the amount will add to the monthly EMI. its better to telling No to the add-on offers.

If you are interested in taking add on offers don’t, include it with the personal loan.

There are chances that the lenders may add extra add-on offers without your consent. Check your loan statement, and if you found any unidentified entries, contact the lender.

Number of EMIs

Try to choose less number of EMIs. It is better to select the personal loan for a tenure of below three years. the more tenure you choose, the more interest you need to pay.

Banks suggest and encourage the applicants to select the maximum tenure, and they provide a higher loan amount.

Evaluate total expense on loan by computing all the interest and tenure. Select the best, which is costing less as per your ability of the repayment.

CIBIL Score

It is advisable to check your CIBIL score before applying for the Personal loan. There are chances for the entries in your CIBIL without your consent. If you found this type of entries in CIBIL, contact the lender to remove the suspicious entry.

A Hard search of your CIBIL score will impact till two years.

If you have bad credit scores, don’t go for a personal loan, this will affect negative on your CIBIL. Consider improving the CIBIL score by paying existing debts. don’t go for new loans or credit cards until unless you are paying the existing debts.

Do not Apply with the Multiple Lenders

It is essential not to apply with multiple lenders at the same time because, for each new application, a credit score inquiry gets reflected in your CIBIL. Lenders consider the applicant is in more debt. If you do like this, there are chances to rejection of your multiple applications. Even you will not be able to get a single loan.

Consider the Requirement of Loan

If you have a good credit score and highest eligibility, lenders offer you a personal loan. It is essential to why you are choosing a personal loan to try to go for the personal loan if it is essential.

If you are applying for the personal loan, make a clear picture of the need for the loan amount. Take the loan amount, which fulfills your requirement don’t go beyond that.

It is simple to obtain a loan, but every single rupee you receive from the lender that will need to repay with interest.

Availability of Prepayment Option

Lenders provide the loan to get the profit from the loan interest.

If one can decide to choose to close off the personal loan, it will affect the total amount of the interest.

Banks levy prepayment charges on the outstanding principal amount. the fees are ranging from 1-2%.

It is advisable to ask the lender about the preclosure option.

Conclusion

A Person who has eligibility can receive multiple offers. At the same time, tend to the tricky offers will throw you in debt. Comparing with the NBFCs, Banks provide the lowest interest rate.

Applying for instant personal loans with NBFCs will cause you to pay the highest interest rate. Some times the interest rates ranging from 36%, which is very crucial to repay.

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About Geet Sharma

My Name is Geet Sharma Financial Blogger & Founder of Paisabank.org. We are a personal finance blog dedicated to finance & financial planners. The main aim of this blog is to help people to informed about financial decisions.
View all posts by Geet Sharma →

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