What is a personal loan?
A personal loan is a form of unsecured loan taken advantage of by individuals on the basis of specific criteria, such as level of income, employment history, credit score and scope for reimbursement. The loan is usually taken for the fulfilment of personal requirements from a banking establishment or a non-banking financial company (NBFC).
The working of a personal loan is very similar to any other type of loan. The bank lends you a certain amount so that you can pay for your requirements. You have to pay back your loan in weekly, fortnightly or monthly repayments according to an agreement with the bank.
Below mentioned are the point to keep in mind:
- Select an equitable lender
In order to find the right personal loan lender you have to do a lot of research and consider different options like your bank, online lenders and more. See if the loan amount matches your requirements. Interrogate each of your options about the rate, terms of the loan, requirements of down payment, insurance of property, cost and fare of all kinds and compare the details on each of the offers.
2. Keep your documents handy
For confirmation purposes you will be asked to submit documents, while applying for a personal loan. These documents include ID proof, income evidence, bank statements, etc. Keeping these documents handy will make the application process easier and hassle free.
3. Calculate the rate of Interest
Banks are masters of financial jugglery. Customers are often fooled into believing that they are getting the best terms by flat interest rates. However, flat rates are often deceptive as the depletion in balance post in each EMI payment is not considered. Thusly, a lot more payment will be done towards the interest component of the loan.
4. Check your credit score before applying
It is likely to check your credit score before submitting your application to the loan lender. Since every lender has their own ineligibility criteria and requires you to have a particular credit score so that they are eligible for their products. Whether or not you are eligible for that particular loan will be told by your credit score.
5. Plan the repayment before taking the loan
Most lenders have their own EMI calculating provision which allows you to check the reimbursement schedule of the loan before even taking the money. You have to enter the amount you want to borrow with the Interest rate and the tenancy of the loan, and the system will automatically generate your EMIs which will help you understand how much you have to pay monthly.
6. Look over the foreclosure rules
If you wish to clear off your loan before the tenure ends, you are usually charged foreclosure fees by the lenders in order to recover some of the interest they might have expected from the loan. Therefore it is important for you to check the rules in order to see how long you can close the loan, and what are the fees related to foreclosure.
Keeping these few crucial points in mind before applying for a personal loan can go a long way towards ensuring that you have a smooth borrowing and repaying experience.
GimBooks - Loans are disbursed very fast. If all the details and documents are submitted, then GimBooks disburse loan in 1 single day. Also, Very few documents are needed like Aadhar card, Pan and selfie in personal loans and in business loans, just 1 document is needed extra like a bank statement or a GST number.
- Interest rates are much cheaper than other Apps. GimBooks charges an interest rate between 15-24% only. Whereas other apps charges interest up to 40% also. Processing charge is also very less. Max up to 2% only.
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