If it is not managed properly a personal loan might do more harm than good. So as a smart borrower you need to keep these things in mind before applying for a personal loan.
Mention your Credit Score: Mention your credit score is the first and most important thing that the banks will check before checking you a personal loan then a personal loan is not backed by any asset collateral, the credit criteria maybe even more stringent. Other than that secured loans where the value of your collateral becomes a prime factor in deciding your credit score and wallet score is considered the most important factor in the case of personal loans. If your credit score shows your credibility as a borrower and helps the banks decide how big a risk you are for them. All People with good credit scores are likely to get loans easily at a more competitive rate of interest.
Take a Look at Your Finances: This advice is not just for personal loans but for all types of borrow. You must have considered your current and future financial situation before taking any loan. A personal loan may look like the perfect solution for your financial emergencies but if not managed carefully it can turn your finances down. Only enter the amount of your loan and the rate of interest to find out the EMI, etc. that you have to pay every month. Prepare your budget to find out your monthly or yearly expenditure and savings. This question you need to ask yourself if the new EMI can fit into your monthly budget.
A Personal Loan is Only for Emergencies: Like Banks may promote their Personal Loan products for world tours or for buying the latest iPhone, etc. it is advisable to opt for a loan only when you are facing a financial emergency if you are financially good then you don’t need to take any personal loan. Personal loans come with interest costs and charges and should not be taken for discretionary expenses like these. Non-payment of a single EMI may hurt your credit score if you are not paying any EMI making it difficult for you to get other loans in the future. So you must take a personal loan when you think there is no other recourse or you can pay EMI on time.
A personal loan is the best for taking emergencies most easily but the above points should be kept in mind before taking or signing the deal. Any other problem in the future will not only have negative repercussions on your financial situation but will also decrease your credit score which in turn will make it very difficult for you to take loans in the future.
Easy to Manage: There is one reason some people take out personal loans if they already have their own money they can easily manage, such as multiple credit card accounts. A personal loan with a single, or fixed-rate monthly payment is easier to manage your credit score than several credit cards with different interest rates, payment due dates, and other variables and charges with different banks like Standard Chartered Bank Personal Loan you can easily manage not only for this but any other. First, those who qualify for a personal loan with a lower interest rate than their credit cards can streamline their monthly payments and save money in the process, etc.
Conclusion: If you are considering a personal loan for an emergency, get quotes from several lenders to compare interest rates and loan terms so that you can get an idea of different interest rates. Don’t forget to read the fine print and condition, including fees and penalties, etc.
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