A personal loan is a distinctive financial product that lets you access emergency funds, instantly. The finances acquired through the loan can be used to service any type of expenditure, big or small. This makes a personal loan an extremely popular product in the Indian market. Lending institutions too are increasingly offering personal loans. The disbursement of this kind of loan has further been facilitated with the advancement in technology. In most cases, a personal loan is disbursed within just a few hours.
If you are a first-time personal loan applicant, it is important to keep certain factors in my mind. Here is a checklist that you must follow when applying for a personal loan.
Today, the market is inundated with a large number of banks and non-banking financial companies. These institutions offer attractive personal loans; however, you must take enough time to research and pick the best lender. It is easy to fall for the frills while not taking note of the conditions. Thus, you must conduct a careful study of offerings from reputed lenders, compare the various offerings and make an informed decision as part of an effective personal loan checklist.
As with any kind of loan application, you must submit the required documents when applying for a personal loan. Most leading lenders ask you to furnish your identity proof, income proof, latest bank statement, as part of your personal loan application. Enlisting and readying all the required documents at the time of application will make your first-time personal loan process so much easier.
Personal loans carry certain fees and charges that cover the processing charges. Some of these fees include foreclosure fees, processing fees, prepayment fees and more. You must be well aware of these costs before getting your personal loan as not preparing well for the same can cost you grave inconvenience in the future.
As mentioned above, there is a wide list of lending companies that offer personal loans today. Very often, the lenders lure the customer base with flat interest rates. This often leads consumers to believe that they have acquired the best loan terms. However, a flat rate does not carry much value for you as the reduction in balance post each EMI payment is not considered. You will end up paying a much higher cost in the form of the interest component. It is important to always carefully calculate your interest component before you agree with the personal loan terms.
While a personal loan is a great way to avail an emergency fund, you must also take into account your existing debt. If you are already servicing other kinds of loans and credit accounts, then you must essentially understand your debt to income ratio. Getting more credit in the form of a personal loan will only lead to you being weighed down by increasing debt. It will also negatively impact your credit status. As a rule of thumb, you must only go in for a personal loan if your debt to income ratio is less than 30%.
Before you get a personal loan, you must understand the repayment schedule. You should know how you will be making the repayments. Use the personal loan calculator, available on Bajaj Markets, to know your sum payable for a given loan amount. Just enter the amount you wish to borrow, the interest rate and loan tenure. The system will quickly generate the payable amount in the form of an EMI. Learning about the payable EMI will help you plan your personal loan repayment schedule effectively.
When you decide to repay your loan dues before the end of the tenure, it is known as a loan foreclosure. Lenders have distinct rules laid down against the foreclosure of a personal loan. Typically, lenders do charge a given fee as compensation for the preclosure of the loan. This is because they lose a considerable amount that they expected to receive through the loan interest payments. Thus, you must check the foreclosure rules carefully before you get the loan. In case you choose to close your loan in the future, you will be well prepared to understand the associated fees.
It is easy to get drawn away with the lucrative deals offered on personal loans. However, be sure to check all the conditions and read the fine print. Not considering these conditions carefully can disrupt your financial plans.
As a first-time person loan applicant, you should essentially keep in mind the above listed crucial factors. This will go a long way in ensuring that you enjoy a favourable lending experience and can avail funds whenever you require.