A personal loan is one of the best answers to handle any kind of financial emergency. These days, many loan apps can help you get instant cash for emergency situations. You can download a money loan appfrom your app store and apply for a quick loan with minimal documentation. The loan comes in quite handy and can be used to cover both anticipated and unforeseen costs.
Online loan has simple eligibility requirements and is best for small-ticket finances. You can avail a loan up to Rs. 1.5 lakh through a money loan app depending on your eligibility. For bigger expenses, you can apply for a loan through a bank or NBFC.
But before availing a personal loan you must know these financial hacks that can help you manage your loans in the best way possible.
Best personal loan tips you must know
Personal loans are among the most sought-after financial products by the majority due to factors like quick approval, quick disbursement, and numerous others. Well, despite many advantages, there are certain aspects concerning personal loans that most people aren’t sure about.
Here are some of the most important aspects of a personal loan that you must know before getting into the financial commitment –
1. Only borrow money if it is essential
It’s true that with money loan apps, today, personal loans are available at the tap of your fingers. But just because finance is available and you are eligible, it does not mean that you must avail it. Using personal loans to upgrade your lifestyle beyond your affordability is a big mistake.
Before making any loan decision, always bear in mind that a personal loan is a debt tool. You will have to pay back the money along with the interest. So, you will always end up paying more than what you borrowed. Thus, availing credit to buy fancy bags and shoes is a very bad financial decision.
2. Do Your Research Before Applying
Most borrowers make the mistake of not researching enough options before choosing a lending partner. Even if you have an existing relationship with a lender or you are getting a pre-approved loan, you must check all the loan options in the market.
Do a thorough research. Check out the online loans offered by different lenders. Compare their interest rate, processing fees, loan terms and other factors. Make sure to sort out a list of reputed lenders offering you the best deals. Then go through the customer reviews and ratings and choose the lender that fits your requirements.
3. Find the lowest interest rate
Personal loans are infamous for having high-interest rates. Well, this is not entirely true. With the right research and financial knowledge, you can avail a personal loan at a much lower interest rate. Many money loan apps offer personal loans at competitive interest rates.
Also, maintain a good credit score to avail a personal loan at a lower interest rate. In addition to this, you can also consider many other ways that can help you convince the lender to offer you a discount on the interest rate. Some of the factors that can help you secure a low-interest rate are –
- High credit score
- High-income stability,
- Stable employment,
- Adding an eligible co-borrower
- Having a second income
4. Check the eligibilityrequirements
Make sure you confirm that you meet the loan’s eligibility requirements before focusing on the bank and loan that best meet your needs. The two most important criteria for eligibility are your income and credit score. They demonstrate your likelihood of repaying the loan.
If your income and credit score is good, you have a better chance of getting a personal loan with a lower interest rate. Always look for lenders who have minimum eligibility requirements, the processing will be fast and the chances of approval will be high.
5. Keep your credit score high
Maintaining a good credit score is the most important pre-requisite when you apply for a personal loan. Your credit score demonstrates your creditworthiness. A high credit score will undoubtedly increase your chances of receiving a personal loan with favourable terms.
You can negotiate with the lender to offer you a lower interest rate on the loan. They may also waive off your processing fee or offer you a longer tenure for the loan. Therefore, you must pay off your debts and outstanding credit card payments before applying for a new loan.
6. Charges for Loan Prepayment
Prepayment refers to the settlement of the loan before the designated due date, either in whole or partial payments. Not all lenders permit prepayment. So, it is important to ask your lender about their pre-payment terms.
Also, most lendersentail an additional amount from the borrower as pre-payment charges. Further, it is only possible after 12 months since the loan was approved to pre-pay the loan. So, before finalising your loan, it’s crucial to read the prepayment terms and conditions.
7. Read the terms and conditions
Most borrowers skip reading the terms and conditions when applying for a personal loan. But this is a grave mistake. You must read the fine print before submitting your loan application. This will help you discover additional fees, loan transfer terms, and other necessary details.
Personal loans are very useful tools that can come to your aid in case of an emergency. Today many companies offer personal loanswith varying interest rates and loan terms. That’s why,you need to know the most important things that you must check before availing a peronsal loan.
In addition to the above-mentioned points, you must also have a repayment plan in place before availing a peronsal loan. Repaying the loan on time and in full is very important for your financial health.