With the pace of advancements in financial technology, opting for a Personal Loan has become easier than ever. Now, you can get instant Personal Loan by sitting in the comfort of your home as most leading banks and Non-Banking Financial Companies (NBFCs) offer instant digital financing. In addition to not requiring any collateral, the paperwork is not as complex as some of the other loans. Hence, the loan application process is simple and quick.
However, with easy access to credit, many borrowers take the loan process for granted and get rejected for loans in the future because of their poor credit history.
In this article, we will talk about how to be smart about availing instant Personal Loans to make the most of them.
Firstly, you must have a clear purpose for getting a Personal Loan. Right from higher education, wedding, home renovation, debt consolidation, and medical emergencies to international travel, you can get instant Personal Loan to meet any of your financial requirements. You can think of availing the loan in case you need to fulfil any of these goals. In addition to this, you must have a sound repayment plan before you opt for it.
7 Handy Tips to Make the Most of Your Loan:
Below are the 7 useful tips that you can follow to make the most of a Personal Loan:
– Shorten the Loan Repayment Tenure
Choosing a long tenure might look like a great deal in the beginning as you must pay a low EMI amount every month. But by choosing a long tenure, your interest ends up being higher because of the increased period. Thus, longer repayment terms mean a higher interest payout. So, keep your loan tenure shorter as much as possible to avoid paying more interest.
– Choose a Loan Amount Reasonably
It is important to apply for a reasonable loan amount that you can easily repay in decided loan tenure. Every lender checks your repayment ability based on your credit score and current income. Hence, applying for a loan amount that you won’t be able to repay will lead to loan rejection.
– Get a Loan Only When Required
A Personal Loan should only be obtained after a thorough assessment of your financial requirements and existing financial commitments. It is important to understand that while a Personal Loan will help you meet your short-term goals, it will be an additional outgoing money from your savings/earnings for the next few months or years that you will have to honour without any failure. Therefore, it is imperative to ensure that you will easily be able to pay your EMIs in full and on time every month.
– Look For a Personal Loan that has a Low Interest Rate
Personal Loans usually have a high rate of interest because they are collateral-free loans. As the rate of interest is high, even a slight difference in the interest rate can make a significant difference in the total amount you would have to pay as interest. This makes it very important to search for lenders that can provide you with a Personal Loan with low interest rate based on your credit score and repayment ability.
– Do Not Apply for Multiple Loans at Once
Applying for multiple loans in a short period can hurt your credit score. If you do that then it will automatically give the lenders the impression that you are credit hungry and will not be able to repay your loan. This will ultimately take a toll on your credit score which is never helpful if you are looking to avail yourself of a loan, either at that time or even in the future.
– Ask for Loan Prepayment Charges
Many banks and NBFCs allow borrowers to prepay their loans sometimes with some extra charges. Before you narrow down on the lender that best suits your financial requirements, make sure you ask them about loan prepayment. Prepayment of a Personal Loan will help you save a huge amount on the high-interest rate which you would otherwise have to pay.
– Be Careful of Extra Charges
Before you select any lender to get instant Personal Loan, be sure you consider additional loan charges apart from just the interest rate such as processing fee, late payment fee, etc. Bear in mind that having a Personal Loan with low interest rate is not your only criterion. You should consider the above-mentioned factors, along with the level of customer service before you finalize your lender.