Technology has brought about a revolution in nearly every field; then why should the Banking sector be left behind? In earlier times, getting any loan would mean going to the bank, filling up series of forms, attaching your documents in a folder and then meeting up with the Bank Manager or senior official for the approval process. However, things have become much more simplified and easier now.
Anyone who wants to apply for Personal Loan, just need to visit the bank’s official website or any online lending marketplace and fill up the application form for the same. The lending institutions will then send their representatives to collect your documents and complete the remaining formalities. Once, your request is approved, you will receive the loan amount in your bank account within a few hours or days. You don’t need to visit the bank at all, neither for the documentation nor for the loan disbursal. However, before opting for the Personal Loan, one should always keep in mind some critical factors.
You need to think whether you really require the Personal Loan or not. If yes, then how much and which lender would be ideal to approach? Personal Loans are generally multipurpose loans, which can be taken for any use – be it for business, marriage, education or even for planning a trip.
Here are the seven golden rules you must follow before applying for a Personal Loan:
- Only borrow if required
Technology has changed the lending and borrowing transactions and made them easier than before. However, it doesn’t make sense to borrow money for funding your desires. These loans come with higher interest rates, and you will be bound to pay instalments each month until the end of the tenure. Besides, it also affects your CIBIL score if you have many loans or if you fail to repay even a single instalment of your loan. Hence you should first equate the need of the loan and think of all ways and means of repaying it before applying for one. Although there are many banks that offer low interest rates and their criteria for applying personal loan is also very easy. Look for the best deal before applying.
- Repaying the EMIs on time
Late repayments of equated monthly instalments (EMIs) comes with late fees and may affect your credit score which may cause a problem in getting any other loan in future. Make sure that you pay all your EMIs on time. Better for auto debit option wherein the EMI will be debited from your account automatically on a particular date of each month. That way, you will be rest assured that the payment is always going on time. The date of payment can be fixed as per your convenience. You can set a date immediately after your salary release date or whenever you are sure you would have surplus funds in your account for the payment to be done.
- Look for the best options available
There are a variety of Personal Loan offers available at different interest rates, processing charges, tenure and terms and conditions. Even a single lender may have different Personal Loan options. Therefore, look out for the options available in the market and only choose the lender who is best as per your requirements. Nowadays, Axis Bank Personal Loan is popular among the borrowers due to its affordable interest rate and flexible repayment options.
- Keep the tenure short
If you opt for a long tenure of the loan, you may end up paying higher EMIs. Therefore, opt for a shorter tenure to reduce the interest cost, hence making the loan more affordable to repay.
- Use EMI calculator
Nowadays, Online EMI Calculator is available to make it easy for everyone to see how much loan amount they can get and what will be their future EMIs. It is very important to know your accurate EMIs to help you plan your monthly budget.
- Don’t take a Personal Loan for investment purpose
Personal Loans are not secured loans and have high interest rates. Therefore, do not take these loans for investing or other illegitimate purposes. There is no surety if the investment will end up with a profit or not and you will not be able to repay the loan. It will in turn affect your credit score and you might not get any loan in future.
- Clear all the previous debts before opting for another loan
Going for Personal Loan without closing the previous loan shows that the borrower is credit hungry and doesn’t have the financial stability. Hence, the lender may reject the application, which may also bring down your CIBIL score. If a person has an ongoing loan with any other bank or financial institution and wants to transfer it to another bank, then the new lender helps them in paying previous remaining debts. Doing this, you can transfer your outstanding debt to a new lender at lower interest rate, hence, reducing your EMIs. This facility is called Personal Loan Balance Transfer.
These were the seven rules to be followed if you are planning for a Personal Loan. Knowing these rules will help you seal the best deal.