Finance

Is Personal Loan a Good Choice? Here are Some Facts You Should Know About it!

It is very common for individuals to face situations in which they require financial assistance. You might have just started working and not have the required savings for the expense at hand. In such cases, one solution is to apply for personal loan. Unlike secured loans, a personal loan does not require the borrower to pledge collateral to the lender. In addition, it provides a lot of flexibility in terms of using the loan amount.

However, before taking any kind of loan, it is important to have all the information needed to get a good deal. This is to ensure that the loan can be cleared off easily without any unnecessary complications. So, take a look at a few things that you should know before applying for a personal loan:

  1. Focus on the loan amount

The first thing that you should do is to evaluate the funds that are required. Just because a lender agrees to provide a high loan amount, does not mean that you need to borrow the entire sum. If you do not need the entire amount that the lender can offer, apply for a smaller amount. This will help in making the repayment easier.

  • Make sure to keep a good credit score

Irrespective of the type of loan you are applying for, a lender will always check your CIBIL record. This is because this gives them an idea of your payment record and history with debt. This is why it is advisable to maintain a good credit score. Lenders can even offer an attractive personal loan interest rate to borrowers with decent credit scores.

  • Inquire about all the additional costs of taking the loan

Do note that the interest on the personal loan might not be the only expense you are incurring. The lender can also be charging processing fees, prepayment charges, administration fees, etc. Make sure to inquire about all these charges before going ahead with the loan.

  • Use a personal loan EMI calculator to be aware of the loan’s EMIs

Before taking a loan, it is essential to make sure that the loan’s monthly instalments can be paid off. Now, you can only be sure of this by being aware of the personal loan EMI payments beforehand. This is where using a personal loan EMI calculator can come in handy. All that the calculator needs is information regarding the loan amount, its interest rate, and the repayment tenure. Based on these details, the calculator will display the loan EMIs. You can then decide on whether to go ahead with the loan plan or look for a better option.

  • Avoid submitting numerous loan applications

You can keep submitting multiple loan applications to various financial institutions. However, this is never a good idea. Any lender would check an applicant’s credit history and can find out about their previous application rejections. This is the reason why it is advisable to avoid submitting numerous loan applications.

Therefore, these are a few things that one should keep in mind before they apply for personal loan, as this can help in getting a good loan deal.