Be it personal needs – like taking a vacation or paying your child’s tuition fees, or business needs like bridging a cash crunch – with a personal loan, you can address all your financial goals with ease. However, owing to its unsecured nature, many lenders are likely to charge a steep interest rate on your sanction. To get an instant personal loan that is also easy on your pocket, scout for lenders who offer personal loans on customized terms. This will not only allow you to get a fast sanction on an amount of your choice but will also make your personal loan EMI affordable.
Take a look at the following five golden rules that you must observe when availing of a personal loan.
Build and Maintain a Good Credit Score
A CIBIL or credit score is a snapshot of your creditworthiness. It ranges from 300 to 900 and is calculated based on your credit history. A credit score above 750 is considered good and means that you have been prompt in repaying your dues and also have some experience with credit in the past. Since this indicates that you are a responsible borrower, you are in a better position to negotiate the terms of a loan you are availing.
On the other hand, a score below 750 is considered as a low credit score and signifies either that you don’t have much experience with credit or have missed EMIs or defaulted on repayment in the past. As a result, lenders may either charge higher interest rates or even reject your loan application. So, maintaining a good credit score by repaying your EMIs and credit card dues on time and in full and apply for an instant personal loan once you have a good score.
Read Fine Print Before Signing The Deal
Every loan is governed by a list of terms and when availing a sanction, you need to sign the loan agreement entailing these norms. Apart from the loan amount, interest rates, and tenor, the agreement also mentions details such as cheque bounce penalty, foreclosure and part-prepayment charges, penal interest on late EMI payment, and others. If you sign the agreement without reading these terms, you may have to deal with ugly surprises and pay undue charges for minor things.
Borrow Only What You Can Repay
The monthly repayments you make on your loan in the form of personal loan EMIs are ruled by the terms at which you avail the sanction. Failure to pay personal loan EMIs attracts penal interests as well as impacts your credit score adversely. Therefore, you should only apply for such an amount that you can repay comfortably. Also, choose a tenor over which you can make convenient repayments without straining your pocket. Use the personal loan EMI calculator to arrive at an affordable EMI before you sign up.
Also, keep in mind that while you may be eligible to avail more than one personal loan from different financial institutions at the same time, do so only if you have the ability to repay all the loans on time. All in all, consider your financial obligations and income before applying for a personal loan.
Avail Insurance For High-Value Loans
In case of a sudden unfortunate incident, your liabilities are directly transferred to your dependents. While small loans may not be burdensome, big-ticket loans may put your dependents in a difficult position. Thus, it is imperative that you avail life insurance, preferably a term policy, to cover your financial responsibilities. This way, your dependents can repay the big-ticket loan through the insurance with ease. When applying for a term plan, don’t just consider the loan amount, but also other financial responsibilities.
Watch Out For Interest Rate Fluctuations
Interest rates on loans fluctuate according to the RBI policies, which have a direct bearing on your repayment. Higher the interest rate, higher your EMIs. Therefore, as a borrower, it is your responsibility to watch out for the fluctuations in your applicable personal loan interest rates and manage your repayment accordingly. So, read the interest rate reset clause on your personal loan carefully and choose between a fixed interest or fluctuating interest personal loan. In case you cannot accommodate an interest rate hike in your budget, think about refinancing your personal loan with a lender that offers comparatively lower interest rates. This way, you can save on interest.
In addition to these golden rules, keep in mind other important things before taking a loan, such as personal loan eligibility criteria. You can use your lender’s eligibility calculator to see if you qualify for a loan. When scouting for personal loans, apply with lenders like Bajaj Finserv to enjoy easy sanctions on high-value loans of up to Rs.25 lakh at affordable interest rates. With such a hefty sanction via quick approval and disbursal within 24 hours, you can fund all your requirements on a timely basis. You can also avail this sanction as a flexi loan and enjoy flexible withdrawals and repayment to save up to 45% on EMIs. To get an instant personal loan, check your pre-approved offer and enjoy customised deals on loans and other financial services via a hassle-free online approval.