Few things you must consider before taking a personal loan
"Ma’am do you have any loan requirement?" We often hear this as banks now offer ‘instant’ or pre-approved personal loans. A personal loan is becoming very popular as it rescues you out of an immediate financial requirement. This is because it gets processed quickly and the amount gets transferred into your bank account immediately, thus enabling you to meet your financial requirements. So if you are dreaming of a new car or need a little extra money for your wedding, a personal loan could be the exact financial solution you are looking for to fulfill your desires.
Sounds amazing and easy right? Undoubtedly, it is because of the easy and quick processing time. So if you are planning to purchase a loan for future expenses, here are a few things you need to check before opting for it.
A personal loan may seem to be a quick-fix for all your urgent money needs but it comes with high interest rates and short repayment tenures. You should consider your other loans and monthly payments and be sure that you will be able to meet your repayment obligation.
Purpose of the loan
There are many different types of loans so it’s important to choose one that suits your situation and how you intend to use it. Personal loans are made available for immediate use like marriage, hospitalization etc, so take a loan when needy and not greedy.
Hunt for the best deal, this refers to applying for a loan with the lowest interest rate. There are multiple websites on which you can compare the interest rates of different banks and also calculate your EMI. Also banks have alternative options like loans against assets such as gold, shares or even deposits that at times might turn out cheaper, therefore, you should consider them as well.
Read loan agreement details carefully
Even in most TV commercials they clearly mention that you MUST read all related documents carefully. Do not rely blindly on the bank relationship manager and read the loan document to know all the charges, fees and penalties for non-repayment and other details. This will help you not to be caught off-guard later.
Know your credit history
Banks and other credit institutions now consider your CIBIL score while sanctioning loans. A low credit score can either get your loan application rejected or the bank may increase the interest rate. So if you are planning to apply for a loan, clear all your pending dues and check your CIBIL score.
Have you ever opted for a loan? How was your experience?