Since digitalization, obtaining personal loans in India has become deceptively straightforward. However, the sheer quantity of options available on the market might be perplexing for everyone. To solve this issue, you have got to make a checklist. But here, I will make that checklist for you, and all you need to do would be to tick the boxes of those conditions. Once all of your boxes have been ticked, you are ready to go and take that loan.
- Use an EMI Calculator Online
The EMI, or Equated Monthly Installments, is a critical aspect in determining the best personal loan. It refers to the monthly payment you make to the lender, which includes a portion of the principal as well as interest.
When you take out a loan, it is recognized that the debt must be repaid in full. Even missing a single EMI payment might have a negative impact on your credit score. As a result, before taking out a loan, use an EMI calculator online to estimate how much you could have to pay as EMI.
- A Personal Background Verification
One of the most significant factors to consider before taking out a loan is the lender’s reliability. There was a time when banks were the only lenders from whom you could borrow without fear of losing your money. However, other lenders, such as Money View, now give loans much more promptly and conveniently.
If you decide to borrow from a lender, make sure to examine their credibility first. Examine online customer reviews and feedback.
- How Much Time Will It Take?
Most people demand loans in times of emergency. Waiting days for your application to be approved and then for the funds to be disbursed is pointless in these situations. As a result, it is critical that you check the time required for loan disbursement.
While traditional lenders may take several days to provide the loan amount, banks make it a bit quicker.
- Complex Applying Process Vs Simple Applications
Most banks need applicants to supply a variety of documents and several copies as part of the application process, which is unpleasant, to say the least. These documents include everything from identity proofs to pay stubs to income tax returns.
On the other side, many new-age providers have eliminated the need for needless documentation, so check your options and all of them.
- Can it Be Closed Beforehand?
It is natural to desire to pay off all debts if you have unexpectedly come into a lot of money and have loans going at the same time. However, not all lenders allow you to prepay or foreclose on your debt.
Furthermore, even if they do, it will be after a specific number of EMIs have been paid, as well as a penalty charge. As a result, if you wish to prepay or foreclose your loans, consult with your lender first.
- What is the Tenure of the Loan?
The payback term is one of the things to look at when taking out a loan. The repayment term is the duration of time over which you make your EMI payments. The longer the payback time, the lower your EMI amount.
However, a longer payback time implies a higher overall interest rate, so it is best to make the repayment duration as short as feasible. However, it is even more crucial to guarantee that you are able to pay the EMI amount on time every month.
- What are the Interest Rates?
The interest rate charged is one consideration that might assist a person to decide whether or not they need a personal loan. The interest rate charged affects your EMI and, as a result, your ability to repay. The greater the EMI amount, the more difficult it is to repay.
Today, there is a diverse selection of suppliers available, as well as a diverse range of interest rates. Before applying, you should conduct research to obtain the best interest rates for you.
- What are the Added Charged?
Aside from the EMIs, banks may collect various administrative, processing, or service fees on borrowers at the time of loan application. Make sure you discuss this with the lender before submitting a loan application.
Check whether they are one-time or monthly expenses; if they are monthly charges, they must be considered alongside your EMIs, and your monthly finances must be arranged accordingly.
- Are there Alternatives?
Personal loans provided by banks and financial organizations have a high-interest rate and processing fees. If you don’t want to pay a lot of interest, you might always look at alternatives like loans against fixed deposits, loans against stocks, or even gold loans.
These loans are secured since they are backed by assets, and the interest rates will be significantly lower than those of traditional personal loans.
If you have an excellent credit history, there will be no shortage of lenders prepared to provide you with a personal loan. Because banks compete with one another, you can always negotiate the interest rate offered to you. Even a minor drop in interest rate can significantly reduce your repayment burden.
There are so many things that you would need to make sure of before borrowing a loan. Debts have turned out to be one of the biggest factors affecting financial stability and goals in life. So it comes to you to choose the right kind of loan that suits you.