Personal loans often act as saviors in times of emergencies or when one is falling short of funds for buying something or fulfilling a desire or a need. Getting a loan has become much easier in current times owing to a large number of financial institutions offering loans and also simpler procedures for applying and getting a loan approved. Having said that it is important that borrowers do their homework well before taking any loan so that they get a good deal for themselves, are not unaware of the various terms and conditions and do not end up making the common mistakes that are associated with personal loans.
Often personal loans are not taken for very long durations and the amount may also not be very large. Owing to this fact, enough time and attention may not be devoted on choosing the right lender. The applicant may consider going to the neighborhood bank because it is the closest, opt for taking a loan from where he banks usually as he knows the manager there or just apply based on an advertisement he/she sees. While it is not necessary that the above choices will not be good, it is highly recommended that the borrower research well about the various lenders in the market, the terms and conditions at which the loan is available and so on before zeroing in on one.
A healthy credit score is required for getting any loan, especially so for an unsecured loan like a personal loan. The borrower may feel that if the loan is not of a big amount the importance of the credit score could be undermined but this is not the case. Before applying for a loan, the applicant should pull their CIBIL report, go through it to assess their credit health and then apply for a loan. Checking your CIBIL report before applying for a loan a little ahead of time (if possible) will give the borrower sufficient time to better their score if required. If the borrower does not have the required time to improve their score then at least they will apply for a loan only to those places who will find their score acceptable.
Anybody seeking a personal loan will have to sign a loan agreement with the lender. Personal loan interest rate is the factor that gets the maximum attention when borrowers research and compare about personal loans. While the personal loan interest rate is important other factors should not be ignored and one should not sign the loan agreement without being sure what they are agreeing to. Aspects like processing fee, pre-payment penalty, loan interest method (fixed or floating), other charges etc are all factors that deserve attention while researching as well as while signing the loan agreement.
Unlike a home or an auto loan which are sanctioned based on the value of the asset, personal loans have no such stipulation. The amount that a borrower can borrow depends only on his/her requirement and the income criteria. Thus it is easy for the applicant to borrow more than he/she requires; the applicant may also fail to give enough attention to his/her repayment capacity. This could mean that the borrower may not be able to pay his/her installments on time thereby resulting in penalties and a hit at the credit score.
Personal loans are often the most expensive loans. While getting them may not be difficult, it is advisable that the applicant explore other options before applying for a personal. This could help them save on the interest cost and other incidental costs too. One could consider borrowing against bank deposits, securities or gold or borrowing from friends or relatives. One could also consider taking a loan from their employer or explore peer-to-peer lending options. Of course, all these options need to be compared based on interest rate, ease of getting the amount, tenure etc for the user to reach a decision.
Your email address will not be published. Required fields are marked *
Nice Article. There is always pros and cons of every aspect. Indian Cu ...
Thanks for finally writing about >Why Indian women fall short on cr ...
Thank you for sharing your infօ. I reɑlly appreciate yⲟur efforts and ...
Daily Tips to stay Credit Healthy
© All Rights Reserved at Credit Sudhaar