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Things to Keep in Mind While Applying for a Personal Loan

With the new year around the corner, most of us want to start it in style and make it special. Maybe you are thinking of going on a little vacation or perhaps partying with your friends. Obviously, you need to be prepared financially and have enough money. A personal loan can be the ideal financial solution to make your desires achievable.

Nowadays, getting a personal loan is very easy, thanks to advancements in the financial technology sector. Banks, NBFCs, private lenders, and loan apps offer instant loans you can easily avail from your computer or smartphone without leaving the comfort of your home. The popularity of personal loans is a result of instant approval, flexibility, and convenient rates.

As convenient as it is, being financially responsible is the trick. It is a huge decision as it comes with the responsibility of timely repayment. Therefore, before approaching a lender to apply for a loan, take your time to learn about the requirements & terms of the loan you’re likely to avail. Go through this handy guide to learn things to keep in mind during the application for a personal loan:

  1. Understand the Eligibility Requirement

Of course, this is among the top factors when you want to apply for a personal loan. Before choosing a lender, you need to learn the eligibility requirements needed to get the loan. These criteria vary from lender to lender. Though most of them are easier to qualify for, it is important to know what you are required to do.

Most likely, you will be required to be asked for your age, city of residence, employment, monthly income, etc. However, if you fail to meet the stipulated terms, your application might be rejected.

Some of the basic eligibility requirements include:

  • You should be 21 years and above.
  • Have a monthly income of Rs. 20,000 per month.
  • You’re an Indian citizen.
  1. Check Repayment Terms and Other Features

The terms of a loan, especially the loan duration, will determine the total amount you are going to repay. With a longer repayment tenure, you will pay low EMIs but with large interest rates. This implies that you are paying more. However, with a shorter tenure, the EMIs will be high, and the interest rates will be smaller. Therefore, you need to choose a manageable tenure for your entire loan that fits your situation while taking into account the total amount you will be repaying.

Additionally, you can also ask the lender about the special features or any offer on the loan. Some NBFCs offer interest on monthly installments for a part of tenure, which helps in reducing the EMIs, thus making your loan more manageable. Still, you can use a personal loan calculator on the lender’s website to calculate the loan EMIs. This way, you will easily understand the elements of the loan you are availing for.

  1. Compare Interest Rates

Lending institutions and banks offer personal loans at different interest rates. Therefore, some loans are more easily affordable than others. But, you can only know the more affordable personal loan if you look around and compare the lender’s rates before rushing to apply. Compare the rate from various lenders online then choose the most economical option for you.

Aside from that, negotiate the rates with the lender to find an affordable rate. But do not compromise the lender’s credibility. Both of these aspects are crucial when availing of a personal loan.

  1. Check the Prepayment Fees

Prepayment is a full or partial payment you make before the official due date. Though the prepayment option is sometimes allowed by some banks and lenders, not all lenders will accept prepayments. Different lenders and banks have different prepayment terms and conditions. Therefore, you need to fully understand them before applying for the loan.

  1. Know How You Will Repay It Off

This seems obvious, but it is essential to plan how you will repay the loan, whether it is weekly or monthly. You need to plan it sooner on the term of the loan. All these factors will aid you in selecting the right loans to make sure you avoid any unnecessary costs. Taking a loan is a commitment you will be required to pay back diligently and without fail. Therefore, you need to make sure you repay it on time to avoid penalties. More importantly, your credit score will also not be negatively affected.

  1. Don’t Apply for Many Loans at The Same Time

Applying for a loan from different lenders at the same time will negatively affect your credit score. Doing that will imply that you highly depend on loan funds, and your repayment capability is very low. This will lower your score, which isn’t helpful if you need to get a loan. You need to find that one lender you are sure you can qualify for a loan and apply.

  1. Check Your Credit Report

You should check your credit report before applying for a personal loan. Ensure the contents reflecting your report are accurate and match your repayment history. In case of the slightest error in calculations, your credit score will also be affected, which will result in loan rejections. If there are discrepancies, make sure they’re corrected instantly.

Final Words

By keeping these key points in mind, you’ll arm yourself with tools to help you make an informed decision. Lendingplate will help you meet your instant financial needs as it offers instant personal loans with several attractive features and transparency. With the online application process, it will be easier to apply for the loan you desire and be confident you’re on the way to achieving your dreams.

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