Questions to Ask Before Applying for a Quick Personal Loan

Posted by Rupeek Fintech Pvt Ltd. on May 20th, 2021

It might be appealing to sign up for the lowest interest quick personal loan with out any collateral. However, there are several other aspects to consider that can affect your affordability and repayment. Not performing thorough research on a loan scheme before opting for it can disrupt your future financial plans and land you in overbearing debts.

Here are a few questions to ask that can help you make an informed decision.

What is Your Loan Requirement?

The availability of a considerable loan amount can lure individuals into borrowing the highest amount without further deliberation. However, they need to pay an additional interest component along with the principal amount, which can increase as the latter goes up. It is essential to assess your exact fund requirement to avoid over-borrowing.

An online personal loan calculator can help you plan your finances smartly. It is a free tool available on most lenders’ websites to help you adjust the borrowable amount according to affordability.

Is Your Lending Institution Trustworthy?

Given the rise in monetary scams in recent years, individuals must always check for a financial institution’s reliability. Several organizations might seem to offer credit way more quickly than registered banks and NBFCs, which can be a trap. To check for a quick personal loan provider’s credibility, check for details like a registered domain, operational contact information, and customer reviews.

You can also contact your state’s Department of Financial Regulation or Department of Banking to confirm its business registration.

Are There any Additional or Hidden Charges?

The borrowing cost of a quick personal loan goes beyond interest payments. A significant portion of these additional payments includes processing charges. Some other charges that many lenders might not disclose upfront are documentation fees, prepayment foreclosure charges, legal fees, and late payment penalty. It must be the applicant’s prerogative to ask the lending institution about these charges before applying. This can save you from unpleasant surprises during the loan tenure.

Do You Meet the Personal Loan Eligibility Criteria?

For loan qualification, most banks and NBFCs require applicants to:

• Be aged between 21 and 60 years.
• Have a steady source of income.
• Be a citizen of India.
• Meet lender-specific income criteria.
• Have a clean repayment history with a 750+ CIBIL score.
• Produce all mandatory documents.

Individuals must check for any additional requirement of their concerned lender.

What is Your Repayment Capacity?

For effective financial management, keep track of your monthly earnings and expenses. Repaying a quick personal loan can strain your finances if not planned well. Ensure your FOIR is in the vicinity of 50% even after accounting for monthly instalments. Also, it’s wise to set aside rainy day funds when you starting with loan repayments. This way, you can repay the loan without any strain and maintain reasonable liquidity.

To save on the borrowing cost, you can also consider secured means of credit as an online gold loan. Compare interest rates of financial institutions offering such funds and choose one offering the most affordable deal. Also, do not forget to make notes based on the above-mentioned questions to rule out any financial mishap.

Author’s bio:

Rupeek Fintech is a leading online lending platform established in 2015 that specializes in offering gold-backed funding solutions. Within 5 years of its establishment, the company has amassed a customer base comprising over 1 lakh families. Currently, Rupeek’s loan partners are ICICI Bank, Karur Vaisya Bank, and Federal Bank.