Personal loans whether from State Bank of India, Money View Loan, Punjab National Bank or Moneytap loan is a very popular credit option today in the market owing to one of the prudent key features i.e., flexibility. The loan offers flexibility in reference to tenure and repayment and use. Additionally, lenders offer this loan without requiring you to place any collateral or asset and all of it has resulted in an enhancement in several individuals turning towards personal loans in current times. When you require funds immediately and without fretting about any security you can avail a personal loan.
A personal loan is a very popular option. However, you as a borrower must have thorough clarity regarding personal loans. Here’s why it is crucial for you so that you do not witness any kind of unpleasant surprises. It might take time to assess all the conditions and terms in detail, but it is a crucial step towards a good financial future. However, before you place an application for a personal loan, you must ask yourself a few important questions, these include –
Why do you require a personal loan?
If you are witnessing any urgent need for funding to meet some of your instant requirements, a personal loan is one of the best options you can opt for. Borrowing funds from any lender infers you are bound by specific conditions. This means you should put a certain portion of your earnings in the future into mitigating your monthly loan obligations. In case your income is restricted, and you hardly find any improvement in your financial scenario, then it is not a great idea to place an application for a personal loan because it would put a considerable amount of pressure on your overall budget.
What are the other options that you have?
Before you zero in on the final decision of availing a loan, you must ensure to consider all the options that are available. In case you are expecting a performance or festival bonus from an employer, it is best for you to wait. Likewise, in the case, your investment is approaching maturity and you will get a massive amount out of this, use it in place of availing a loan.
What’s the importance or significance of your credit score?
Lenders assess your credit report. In this case, if it is in a bad shape, then lenders would not provide you with a loan. If not, they would levy a heavy rate of interest to cover up your potential default risk. Thus, assessing your credit score must be the initial thing you must do before you apply for a loan.
Do you have any documents in support of your income?
In India, you earn via distinct sources. However, many may not have the documents in support of their income earned. Lenders are not just interested to know your income but even are keen to know if you are constantly earning. So, ensure to collect your salary slips from the company you are working with. Doing so would allow you to keep a thorough and authentic record of the income you are earning.
Do you require adding a co-applicant?
It is thoroughly based on your profile. In the case, your income is inadequate to mitigate the minimum eligibility of a lender, including a co-applicant might work best in your favour. However, if you avoid doing so, then you must keep the listed two major conditions in mind. Firstly, you as a co-applicant must have a constant income and must ensure to clear the debt repayments in full and on time. Secondly, they are equally liable for making payment of the EMI.
Is your EMI affordable?
To get an answer to this question, you must ensure to use the online personal loan calculator. The calculator assists you decide the value of EMI. Additionally, you can use the instrument to compare distinct lending institutions.
How to get assurance about the lender?
There are many lenders like Moneytap loan that provide personal loans at attractive interest rates and features. At times, it is tempting to agree on a personal loan deal available in an instant way from your phone that claims to provide you with a reasonably cheap deal. However, you must note that such loans come with interest rates too. You do not just require bearing the principal but also the interest rate, which may overall sum up to a higher amount. Thus, it is recommended that you go with a lender who is registered with the Reserve Bank of India, which comes with a huge digital and physical presence and strong technical support. Also, it is crucial for you to carefully go through the terms before you finally sign any loan deal so that you are aware of how much EMI you need to pay and for what time period.
Can you pay your debt with zero difficulties?
To answer this question, you must ensure to review your present financial commitments. Ensure a checklist of all the important expenditures. Below mentioned are a few of the important expenses that you cannot avoid. These include –
· Utility bill payment
· Child’s educational expenses
· Cost of the home
· Emergency fund to meet your unforeseen expenditures
· Insurance premium
· Water and house tax
After you deduct such expenditures from your month-on-month income, if still you hold 50 per cent of your income with you, then you can go ahead with your decision of availing a loan.
Which term must you select?
For this, you must ensure to use the online personal loan EMI calculator. The loan term is related directly to your EMI and interest rate. When you select a lower term period, then the EMI rises but the rate of interest falls. While the loan EMI falls over the long term, you will still require paying a higher interest constituent.
Are there any other fees on the personal loan application?
A few personal loan lenders tend to levy prepayment foreclosure or prepayment penalty. This is the cost levied by the lenders if you are looking to repay the loan quickly or transfer the balance of your present loan to another bank lender. Personal loans even come with additional fees that are way higher as compared with the rate of interest. A few of these fees involve processing charges, insurance fees and service fees. It is crucial to check out the fees before you finally sign up. Penalty fees might even be charged in the case of late payment or check bounce.