NBFCs offer hassle-free personal loans that can be a quick source of funds to meet a variety of financial needs. You may use it to pay for a medical emergency, fund education or travel expenses, finance home renovation, meet wedding-related expenses, or for any other purpose. While a personal loan can be a convenient mode of converting large expenditures into easy loan EMIs, there are certain crucial things to keep in mind while applying for a personal loan.
Based on customer reviews, we have accumulated 8 golden tips for you to consider before applying for a personal loan. These tips will help you save money, improve your credit score and satisfy your financial needs without any stress.
1. Identify Your Requirement
Whether you need money for a wedding, travel, education, medical emergency, or any other purpose, identifying your purpose first and then applying for a loan accordingly will save you from over-borrowing and failing to repay later. Once your purpose is clear, apply for a loan amount as per your income and repayment capacity. You may use a personal loan EMI calculator to know how much you will need to pay every month towards the loan amount you are applying for and make the necessary adjustments accordingly.
2. Select the Right Lender
There are different types of lenders you can approach, including banks, online lenders, NBFCs, informal credit providers, friends and relatives, and so on. Not all of them are the same, and not all of them may suit your current circumstances and requirements. There are several factors you must consider while selecting a lender, including the loan amount, interest rate, eligibility conditions, documentation requirements, application procedure, security requirement, approval speed, customer support, etc.
Based on your requirements, choose a lender who provides good services at a fast speed with excellent customer service.
3. Avoid Over-Borrowing
Lenders offer ample loan amounts to eligible candidates, but you need to know your requirement and apply for the minimum loan amount you need. For instance, if Clix Capital offers you a loan of up to ₹ 25 lakhs and you can meet your current requirement with ₹ 10 lakhs only, it’s not wise to apply for ₹ 25 lakhs unnecessarily. After all, you will have to pay interest on the amount you borrow. Ideally, you must borrow only the amount that you are require.
4. Review the Loan Terms Carefully
Before you apply for a personal loan or accept a loan offer, carefully look at the lender’s loan terms, including processing fees, interest rates, late fee structure, prepayment fee, eligibility, legal charges, and others. Ensure that these charges are reasonable and easy to manage.
5. Check Your Credit Score
Your credit score is a direct result of your credit history and repayment habits, depending on how regular you are with your credit card bills and EMI payments. The score ranges from 300 to 900, you need to have a credit score of at least 725 to apply for Clix Capital’s personal loan. Check your credit score here and see where you stand. If your credit score is less than 725, take steps to improve it first and then apply for a loan. If you apply for a loan with a low credit score, your loan application will be rejected and you will end up reducing your credit score further.
6. Ensure Security for Your Sensitive Data
While applying for a personal loan, you have to provide a lot of sensitive data to the lender, including your identity proof, address proof, financial documents, etc. You have to ensure that the lender takes the responsibility to keep your data secured and confidential.
7. Use a Personal Loan EMI Calculator
Personal loan EMI calculator is an incredible tool that allows you to calculate the amount of EMIs you have to pay every month after taking the loan. Choosing a shorter loan term keeps your EMIs higher, but you end up paying a lower interest amount over the loan term. On the contrary, choosing a longer loan term reduces your EMI amount, but the interest outgo increases significantly. Accept a loan offer with easily manageable EMIs within your income and budget.
8. Plan Your EMI Payments Beforehand
Once you get an idea of your EMIs, start planning how you would be paying them every month. Consider your income and expenses and ensure that your total EMIs every month do not take more than 30% of your monthly income.
Go through your bank and card statements for the last few months and identify where you are spending your money. Try to cut down those extra costs and make a budget in which you can meet your expenses, pay your EMIs, and still save some money for an emergency.
Clix Capital is an online platform that offers fast personal loans for multiple financial requirements, like education, travel, medical emergency, wedding, home renovation, debt consolidation, etc.
Apply for a personal loan now and meet your financial needs instantly.
You can also reach out to us at firstname.lastname@example.org or call us at 1800 200 9898