Personal loans in India are available from various sources, including banks, credit unions, and online lenders. The amount of money you can borrow as a personal loan depends on several factors, including your credit score, your income, and the lender’s eligibility conditions.
Personal loans come at a fixed interest rate, meaning the monthly payments will stay the same throughout the life of the loan. To figure out which options are best, use a personal loan EMI calculator. Here are mentioned 10 rules every borrower must know before applying for a personal loan.
10 Rules to Avail Personal Loan:
1. Choose the lender carefully
Personal loans are avail but the terms & conditions vary. For example, while banks and NBFCs may advertise reduced interest rates, some conditions might be undesirable, or a borrower may not be qualified due to specific standards.
2. Look at the repayment tenure options
The repayment time period is generally between one and five years, but it can be as high as seven years in some cases. The personal loan interest rates will determine the EMIs, ideally around 40-50% of your monthly income. If you can afford to pay more, you can shorten the repayment period and save on interest.
3. Compare processing fees
Personal loan providers generally charge a processing fee, a percentage of the loan amount and usually between 1% and 2%. Some lenders also offer pre-approved personal loans with lower processing fees. It’s important to compare these offers before making a decision.
5. Read the fine print
Once you’ve decided on a lender, read the terms and conditions carefully before signing the loan agreement. In particular, look for clauses that allow the lender to change the interest rate during the loan tenure. Also, be aware of any penalties that may apply.
6. Maintain a robust credit score
Unsecured personal loans are a type of unsecured credit. Lenders will check an applicant’s credit score before extending a loan, reflecting the borrower’s creditworthiness. A good score is anything above 750.
7. Avoid advance EMIs
Some lenders request one or two EMIs from borrowers during disbursement as a deposit. On the other hand, an advanced EMI increases the interest rate and causes borrowers to pay more. Therefore, avoid advanced EMMs and pick a personal loan application or lender that only requires you to make monthly payments. You need to use a personal loan EMI calculator to get a clear idea.
8. Ensure timely repayments
It’s critical to pay EMIs on time to maintain a borrower’s credit score and avoid paying a late payment penalty. Furthermore, a negative comment in the credit score might prevent another loan from being approved in the future.
9. Only approach a credible lender
As previously said, multiple hard inquiries against the borrower may occur due to approaching several lenders at the same time. This implies that the individual is desperate for credit. As a result, lenders become guarded about giving credit to someone who appears to meet these criteria. So ensure you understand the eligibility requirements of several lenders before contacting any one of them.
10. Check for hidden charges
Find out whether there are any processing charges, late-payment expenses, and other hidden or embedded costs that might inflate the total amount paid on any loan. If there are, set aside money for these items or find a way to avoid them.
How to apply for a Personal Loan?
If you are looking for a Personal Loan, you can apply online through our website. You will need to provide some basic information about yourself and the loan you require. Our representative will get in touch with you and help you with the rest of the process. Consider the following factors before applying.
Fees and Charges:
The processing fees, prepayment charges, and late payment fees, so are sure to read the terms as well as conditions carefully before signing up.
The Sum you can Borrow:
The maximum loan amount that you can borrow is Rs. 20 lakhs. However, the sanctioned loan amount will depend on your eligibility and credit score.
The minimum monthly payment for a Personal Loan:
You should know many things about personal loans. Here are some of the most important ones:
● Your minimum monthly payment will be 1% of the principal outstanding, subject to a minimum of Rs. 500/-
● You will be charged an interest rate of 2% per month on the outstanding amount.
Prepayment of Personal Loan:
If you choose to pre-pay your loan, you will be charged a prepayment penalty of 2%. So, try keeping this in mind before making any decisions.
Personal Loan Interest rates:
As said before, the interest rate on a personal loan is 10.99% to 24% per annum. The actual rate will depend on your credit score and income.
Usage Restrictions:
The personal loan can be used for various purposes, including travel, medical emergencies, wedding expenses, and home renovation.
Maximum loan amount:
The maximum loan amount that you can borrow is Rs. 20 lakhs. However, the sanctioned loan amount will depend on your eligibility and credit score.
Collateral requirements:
Most financial institutions do not require any security or guarantor.
Conclusion
Borrowers, on the whole, need to study or compare different financial alternatives before applying for a Personal loan. Personal loans are often long-term commitments that can help you avoid future financial difficulties. Once you have come to a decision on the type of loan that’s right for you, compare the interest rates provided by banks and Non-Banking Financial Companies (NBFCs).