A personal loan is an unsecured form of borrowing that can be immensely beneficial when used properly. Thanks to recent market developments, applying for a personal loan and getting approved for one has got a lot easier, with some lenders even disbursing the full amount within minutes of application. This is only possible because a personal loan does not require you to pledge any collateral. All that is required is a good CIBIL score and that you meet the lender’s personal loan eligibility criteria.
However, you may wonder when is it OK to take a personal loan? A personal loan does not have any spending constraints, so you can use it for whatever purpose you desire. This makes it a handy solution for any financial need, be it a vacation or a medical emergency. However, financial advisors say that it’s best to avoid using an instant personal loan to make investments as it can be harder to repay if you incur losses. As long as you have a plan of repayment ready and can afford monthly payments in the form of EMIs, you can take a personal loan.
If you’ve asked yourself, ‘What should I check before getting a personal loan?’ and come up short, here are 5 guidelines you can follow when taking a personal loan.
Pick Suitable Lender
When taking a personal loan, you may be inclined to go with a bank or lender you’re familiar with. This may not be the best option for you as you could secure a lower interest rate on personal loan when you avail it from another lender. So, compare rates and features before selecting a lender.
Familiarise Yourself With Interest Rate
The interest rate on a personal loan is one of the top 3 elements you should carefully consider before signing up. Depending on the amount you desire, calculate the total you will be paying until the end of the tenor and then decide whether or not this is a suitable option. Remember, when taking a loan, never bite off more than you can chew. Simply calculate the total you’d owe and the EMIs you’d have to pay and ensure that it does not amount to more than 20% of your monthly income.
Ensure You Meet Eligibility Criteria
Before applying for a personal loan, be sure to check lender’s eligibility criteria. As a personal loan is unsecured, lenders are often very strict when it comes to such formalities and do not shy away from rejecting applicants that do not meet the criteria. To avoid facing rejection, here is the general personal loan eligibility criteria you need to meet. You need to be a salaried resident of India, aged between 23 and 55 years. You also need to maintain a minimum annual salary that differs according to the lender and the state you reside in.
Opt For Shorter Loan Tenor
While a longer tenor amounts to smaller monthly payments, it translates into higher overall credit. When you opt for a shorter tenor, you reduce the interest burden on your finances and clear you debt quicker. A debt-free financial profile is invaluable and you should aim to reduce loan tenor as much as possible, as it will also save you a lot of money.
Check Loan’s Foreclosure Policy
Before choosing the lender, find out about foreclosure policy of your shortlisted lender. When you choose to foreclose a loan, you instantly negate all future repayments and you should always choose a lender that allows you to foreclose at zero or minimal charges. This will make your repayment more cost-effective.
When you adhere to these rules, you’re sure to narrow down on the option that suit your needs perfectly. Among the options, you’ll find Bajaj Finserv Personal Loan offers some of the best benefits at minimal interest rates. In addition to the high loan amount of up to Rs.25 lakh, you also enjoy instant approval and benefit from India’s fastest personal loan disbursal service, which means you’ll get full loan amount in less than 24 hours of approval. You can also choose from a flexible tenor ranging from 12 to 60 months and even foreclose this loan with minimal costs. Skip the queue, check your pre-approved offer online and get approved for a personal loan within minutes.