A personal loan also known as signature or unsecured loan is an unsecured loan given based on the creditworthiness of the applicant. It can be availed without any collateral or security and does not even require a guarantor. You need to have a good credit score of 750 or above and a good credit history to borrow the loan from the lending institutions.
Important things to consider before applying for a personal loan:
Credit Score of the applicant: You must check your Credit Score before applying for a personal loan in any bank or a financial institution. It is a factor that plays an important role in the approval of the loan application. CIBIL keeps a record of your credit history by collecting your credit data from all the banks and financial companies. A good credit score gives a green signal to your loan application and also lowers the interest rates charged to you.
Increase your loan eligibility: You can extend your Eligibility of the loan amount by adding your income with your spouse’s income.
Relationships with Banks: You can get discounts on interest rates if you apply for a personal loan from a bank where you have a relationship. In such a case, the bank considers your previous repayment records and analyzes your capability to afford a new loan. Also, you can easily negotiate on the interest rates offered to you, eventually saving a lot of money.
Penalties: There are many charges that are related to personal loans other than interest rates. If you wish to close the loan earlier, this will require you to pay penalty charges. Search for the lenders that do not charge a penalty for paying the loan before the completion of tenure. Also, check the charges that you need to pay in case of paying your EMIs late.
Comparing the rate of interest in the market: Interest rate of each and every bank often varies, some charge high interest rates while some charge low interest rates, so make sure to compare interest rate of various banks before coming to the right option for yourself. You can compare interest rates of various banks at dialabank.com.
Evaluate your capacity to repay the loan: Always evaluate your capacity to repay the loan. Ensure that your salary is enough to repay the loan amount borrowed with interest. Use EMI Loan Calculator provided by dialabank to estimate your per month installments and plan your repayment of the loan accordingly. Consider all financial obligations and debt repayment before borrowing a loan.
Avoid falling for fake, gimmick offers and plans by
Avoiding floating rate of interest.
Borrowing from lenders who got a transparent process for availing a loan
Often, low-interest rates lenders hide extra charges in paperwork, so beware of that this practice.
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