Any loan without a collateral seems god sent at your dire times. The personal loan falls under this category. Though you might have taken a personal loan to meet some immediate requirements, you have to keep in mind certain facts while applying for the loan.
One of the most important pointer to remember is that when taking a personal loan, you should never settle for the first offer. There is an array of lenders with various offers, and it is important to compare your offers before you finalize any deal. Explore the current interest rates and use your power of negotiation to get the best personal loan offer.
If you are applying for a personal loan, it means you are in need of money. However, how it is not a great idea to let lenders know how much you are in need of a personal loan. The lenders can know about this is if you apply at too many institutions simultaneously.
The interest rate is the prime cost borne when taking a personal loan. It is recommended to consider the rate of interest as an important feature. The interest rate of a personal loan depends on various factors such as, the credit score, income, etc. A good credit score gives you the power to negotiate on the interest rates offered by the lenders.
The biggest and detrimental mistake you can make is by missing your EMIs. Any default in EMIs can affect your credit score adversely and reduce your future loan possibilities. Set reminder or opt for auto debit from your account so that for any reason whatsoever, you never chance to miss an EMI.
Deciding the tenure for your personal loan is of vital importance. It is advised to keep your loan tenure as minimum as possible. Having a longer loan tenure might be tempting, but you might end up paying more than what you actually borrowed.
The biggest advantage while undertaking a personal loan is that it can be used for multiple purposes. However, it is discouraged to use a personal loan for any illegal purpose. Taking a loan with the motive to gamble is one such example.
Even if you are eligible for a loan of Rs. 1 lakh but your requirement is for only Rs. 75,000, borrowing that extra Rs. 25,000 might be tempting, but it is advised not to go for it. Borrow only what is needed by you and what fits within your budget , because it is only you who will have to repay the undertaken amount.
Helping friends and family members in times of their need is appreciable, but remember to keep yourself out of any jeopardy. When you apply for a personal loan on behalf of someone with a poor credit score, it is important to ensure that the personal loan will not be defaulted.
Your eligibility to take multiple personal loans does not mean you should take all of them. Taking Multiple personal loans will definitely land you in a debt trap. Keep your budget in mind and see if you can take the burden of multiple loans. Never forget a loan is a debt and has to be repaid.
Paperwork might feel tiresome and boring to go through, and we often sign the agreement without reading it carefully. However, it is always advisable to read the fine print before you sign it to avoid any hassle or unexpected surprises in the future. It also helps you in planning your repayment in a better way.