10 Basic Rules to Get the Best Deal for a Personal Loan
A personal loan is one of the most common kinds of loans that people take. It is also the easiest kind of loan you can avail of. People take personal loans for numerous reasons, be it a holiday abroad or supplemental funding for a child’s education. You can also take a personal loan to pay for a home renovation. In case you apply for a personal loan, you can do so at a bank or a non-banking financial company (NBFC). Since a personal loan is approved very quickly, provided you have met all the criteria for personal loan eligibility, it is also known as an instant personal loan.
However, if you are in the market for a planned personal loan, it is vital to know some important criteria in order to get the most profitable deal. Individuals who are potential borrowers should always check terms and conditions, rates of interest, etc., and browse through a range of lenders’ sites. You can also effectively learn about different interest rates and loan amounts with the tenures you are considering if you use a personal loan EMI calculator. Doing your homework thoroughly is key in getting the loan you want on terms that suit you. Following these ten basic rules can help you.
Determine the Rate of Interest
Interest rates are probably the most important thing to analyse when getting a loan. You must always compare loan offers from different lenders and choose the one that offers you a good deal on interest rate. You can use a personal loan EMI calculator to compute interest rates on different loan amounts with a range of tenures. This is an electronic facility that is available on most websites of banks and NBFCs.
Select Your Lender with Care
Banks, fintech bodies and NBFCs all provide individuals with personal loans. However, the terms and conditions of personal loans may vary between these three. Typically, NBFCs and banks may offer you lower rates of interest and have some stringent personal loan eligibility criteria to fulfil. These should be reviewed before you go in for a loan application with a specific entity. Comparing a fair amount of lenders’ terms and conditions helps in this.
Maintain a Good CIBIL Score
A CIBIL score is an indicator of your creditworthiness as a borrower. Before giving you approval for a personal loan, lenders check on your credit score. This is mainly because personal loans are loans that are unsecured forms of credit. Credit scores fall within a range of 300 - 900, and a credit score of 750 is considered acceptable. Thus, it is imperative that you have a good credit score before applying for a personal loan.
Don’t Agree to EMIs in Advance
When you approach certain lenders for a personal loan, they may request you to make advance EMI payments. This is not a good idea for you, the borrower, as it effectively increases the rate of interest, and you will end up dishing out more on repayments than what has been agreed upon.
Make Repayments on Time
If you wish to let your credit score remain high, you should make timely payments on your EMIs. If you have taken a loan in the past, this will stand you in good stead as far as maintaining an acceptable credit score is concerned.
Choose Loans with Short Tenures
Personal loans that offer you long tenures of repayment may assure you of low interest rates, but you may very well complete your loan with higher repayments in the long run. If you are able to afford the equated monthly instalments on a loan, keep the tenures short to permit the total repayment in check. A personal loan EMI calculator can aid you in deciding your best choices.
Be Careful with Your Applications
Making too many inquiries at once has borrowers appear as if they are desperate for loans. Hence, you must be careful not to make too many loan applications with different lenders at the same time.
Loans come with charges and fees that you may fail to view at the time of taking loans. Hidden fees and penalties for late payment, processing fees, and the like can cost you plenty, and these may inflate what you originally bargained to pay.
Know About Foreclosure Charges
Personal loans can be foreclosed at any time; however, different lenders may have a charge for this. Ideally, you should be able to foreclose your personal loan with no fees attached or very low fees.
Watch Out for Schemes with 0% Interest
You may be offered what seems like an attractive loan offer with nil EMI interest. Lenders can lure you with such schemes by collaborating with consumer durable retailers. What you may not expect is the high charges for filing and processing that make up for the 0% interest.
AuthorBio: Vinod Gill is a writer who specializes in writing content on Insurance and Finance subjects. He is a Digital Marketing Consultant, Blogger, and Co-Founder of Techpreview.