4 Things To Check Before You Apply For A Personal Loan

Posted by arjun on March 7th, 2019

When a person’s financial diet is not well-balanced, in that case, they opt for loan. It is considered to be the best way to fulfill all your needs. Usually, people often spend our savings which they have preserved for the future. But now, there are lenders that offer personal loan with a nominal interest rate to tide over emergency expenses. It is also called as unsecured loans as you don’t have to keep any collateral with the lender.

While opting for a loan, always do your research first. You should never get settled with the first deal you get. There are so many lenders in the market, giving tons of offers that you can explore with attractive interest rates. So we always advise you to do thorough research before you finalize your lender. If you are looking for a personal loan and are wondering how to proceed, here we are mentioning 5 things that you should look before you apply:

Identify Your Requirement: The very first thing that you need to do is identify the exact requirement on funds. Many times, we have seen that people fail to calculate the actual “need of fund”. 

Eligibility criteria and documentation

As this is an unsecured loan, most of the lenders require you to show your job continuity proof. Let’s say some lenders require a customer to be employed for at least 1 or 2 years, and at least one year with the current employer. In addition to this, you must be earning a salary of at least 15000/ month. You would need to submit the proof of identity, proof of address, a statement from the bank stating last 6 months status and the latest salary slip with form 16.

CIBIL-Credit History

Every lender uses this as a key parameter to determine the rate of interest and whether you are eligible for that actual loan amount or not. Your past track record speaks a lot as for credit profiling; many companies use the data from credit information bureaus. Nowadays, lenders also use alternative credit data such as your social media behavior, where you stay, your current job profile and income. Based on all these inputs, the lenders will sanction and disburse the loan amount directly to your bank account. If you have a good repayment track record or high CIBIL (credit score) score, it will not only ensure quick approval but could also help you to negotiate in lowering the rate of interest. Hence, always check your credit score, pending credit card dues (if any) before applying for a personal loan

Interest rates: you can get a complete breakdown on personal loan interest rates offered by various lenders so that you can understand and analyze the best suitable option for you. The interest rate usually varies (11% to 16%) as these loans do not require any collateral from your side. A lot of lenders offer different interest rates with attractive EMIs plans, which you can check online.

Prepayment fees charged by banks

The pre-payment can be beneficial if you make it during the initial stages of your loan as soon as the lock-in period ends. You can compare and check whether your lender charges for pre-payment or on part-payment so that you can save the cost and then proceed. It is always advisable to discuss all the terms and conditions before signing anything.

Hence, a personal loan has become one of the important financial tools to meet an emergency expense.

Well, we can’t cover several factors or points here. For more information on a personal loan, you can check online. Hope this information helps you!