If you face a cash crunch and are in dire need of immediate funds, then banks and NBFCs offer a unique product called personal loans. Such loans are useful in any situation that involves substantial financial expenditure. They can be repaid through EMIs (equated monthly instalments).
Some of the things to consider are listed below:
- Maintaining a good credit history:
An individual when they apply for personal loan should always check their credit history before filling out the application. A credit score is a representation of the applicant’s creditworthiness, based on the applicant’s history of credit repayment. A high credit score is considered a good sign and may lead to low-interest rates and quick approval. A low credit score poor debt management and may result in high-interest rates or rejection of loan application.
- Assess all the costs:
Before going ahead with the personal loan application, it is essential to assess every corner of the financial requirement. Making a list of all needs and requirements and prioritising them may be helpful. Some of the common purposes for taking a personal loan include buying a vehicle, financing a wedding, family vacation, or a medical emergency. Based on the prices and expenses, an individual can decide the amount they need to borrow.
- Compare interest rates available:
It is always better to check the market and the offers provided by different banks and NBFCs. Comparing the interest rates offered by the lenders ensures that the applicant gets the lowest price. Comparing helps in selecting loans at the lowest rate and the best ones.
- Consider needs:
Making a list of all the needs and requirements and then prioritising on which are essential for financing is important. Whatever may be the reason for opting for the personal loan, it is always better to jot down the requirements and every factor involved for taking out the loan. If the needs are deemed unpredictable, opting for a flexible personal loan is suitable.
- Check for fake and gimmick plans and offers:
Since the dawn of digitisation, fraudsters, and fake offers have flooded the market. They thrive on the customers who get fooled by the offers they provide. Thus, it is best to check the authenticity of every offer provided by the institution. These schemes are highlighted in such a way that they catch the eye of an individual looking for these features.
- Evaluate the ability to repay the loan:
Before moving on with the loan application, it is best to plan the repayment quick. This can be done by estimating how much of the monthly income will go towards the loan repayment. Keeping in mind the array of debt and financial obligations is also crucial while planning out personal loan repayments.