Know about the different tips to get a personal loan.
Personal loan is an unsecured loan provided by banks and NBFCs to meet their personal requirements. A personal loan involves no collateral unlike a car loan or a house loan. The eligibility criteria to get a personal loan mainly includes income proof, credit history, repayment capacity, etc. Personal loan being an unsecured loan has no collateral to auction and recover the money in case of a default, therefore the interest rate is higher.
Personal loans can be taken for various reasons like funding family functions, arranging down payment for home or car purchase, funding vacations, paying off outstanding credit card bills etc. Whatever is your reason, here are a few tips to remember if you are planning to get a personal loan.
- Compare Interests Rates – Each bank offers a different interest rate. At times the difference in interest rates offered might not be very high but it makes a significant impact on the overall repayment amount. Make sure you compare different interest rates offered by banks and then choose. You can research about the various interest rates offered by banks on their official websites.
- Check Repayment Flexibility – Nowadays some of the banks have full or partial pre-payment charges. Which means that if you want to repay the loan amount before the decided tenure, you will have to pay certain charges. Although not all lenders allow partial prepayment, hence it is suggested to check the flexible repayment options and related charges.
- Compare fees – There are various fees and charges levied by banks that need to be checked and compared before buying a personal loan. These include processing fee, late payment charges, bounced cheque charges, loan cancellation charges and service tax on services provided by bank. Each bank has a different processing fee charge. Compare all the charges before buying the personal loan.
- Compare EMI – Equated monthly instalment (EMI) is a regular payment made to repay the loan. The amount of EMI depends upon the loan amount, interest per month and number of instalments. Before taking the personal loan, you must calculate the EMI to be sure if it is affordable. You can now easily calculate the EMI amount on online EMI calculator.
- Check Required Documents – The required documents to be eligible to apply for loan can vary from bank to bank. Some of the basic documents are mandatory irrespective of any bank or financial institute you are applying for personal loan. These include address proof, identity proof, income proof and certified copies of licenses and degrees. It is crucial to check the required documents stated by the bank and keep them ready before applying to avoid any inconvenience in getting the loan approved.
Tip: Besides the points mentioned above, check the credibility of the bank you are planning to buy personal loan from to avoid any kind of negative experience.