Applying for a Personal Loan? Know These 4 Things First

In an individual’s life, there are many dreams. However, even the savviest budgeter sometimes runs into a circumstance to which he is unprepared. Maybe it’s an unexpected medical or car repair expense — or perhaps it’s entering the bliss of married life. There are chances that you do not have enough savings to cover the cost. In such a case, you either use a credit card or ask a family member for a loan. Another option that can be fruitful in such situations is a personal loan. The best part about applying for a personal loan is that, unlike a home or a car loan, a personal loan is not held against any assets. 

Image Courtesy: Shutterstock

Since it is unsecured and the creditor does not ask for collateral like gold or land, you need not worry about having valuable collateral in the first place. However, because of the same reason, the interest rates on personal loans are higher than those on house, vehicle, or gold loans. 

Activities You Can Fund Through Personal Loan:

1. Plan a family vacation 
2. Fund a wedding 
3. Renovate your home 
4. Invest in a business
5. Clear credit card debt 

There are a few things that need to be kept in mind when applying for a personal loan, such as: 

• Loan Amount 

It is one of the essential things that you should know for sure before applying for a personal loan. The lesser you borrow, the quicker and more quickly you can pay off your personal loan. Under ideal circumstances, you should borrow only the most necessary amount, while making other arrangements for the rest.

• Interest Rates 

Since there are many banks and financial institutions, each offering personal loans at different interest rates, it is crucial to consider the loan option with a low interest rate. It is because the interest rate charged on loans can affect your repayment capacity. Today, there is a wide range of providers with an even more comprehensive array of interest rates. To find the best interest rates, you must do the required research.

• Prepayment Charges

When frequently hit with a windfall, the first thought of making successful use of the money you have is always to repay unpaid loans. Most personal loan lenders charge you interest if you pay off your loan prematurely. So, it is essential to review the interest for prepayment before applying for a personal loan.

• Disbursement Time

Sometimes you need loans in a rush. You are planning a wedding, for example, and some last-minute decoration work is underway. Immediately, your contractor tells you that the funds were not enough, and it will require additional money to complete the work. The pace with which the lender will disburse the loan at such moments is of paramount importance. So, when researching about the banks, you should go for the one that disburses loans within a few hours after approval. 

When you apply for a personal loan, keep the above-mentioned things in mind along with parameters like credit score, interest rate, and other fees. Doing this will help you understand what will work best for you. It also prevents you from making mistakes, such as choosing the wrong lender or an inconvenient tenure and borrowing more than you need. 

Before taking a personal loan, you can also use an online EMI calculator to know how much EMI you’ll have to pay every month. It is an excellent way to educate you well in advance about how much money you will have to shell out as a part of your monthly payments. Personal loans offered by reputable financial institutions like Axis Bank goes on with a flexible repayment tenure. You can even get instant access to funds in a smooth and hassle-free manner. With a speedy approval on personal loans, turn your fantasies into reality!