Important Things to Consider Before Applying for a Personal Loan


While facing a shortage of funds to meet expected or unexpected expenses, obtaining a personal loan seems to be one of the most feasible and convenient options due to its secured nature that does not involve any collateral.

However, one should plan their finances sensibly before processing ahead and perform the necessary investigations regarding the eligibility, numerous charges, and additional benefits related to a personal loan. You can apply for personal loan here-

Read on to know about important things to consider before applying for a personal loan.

Important Things to Consider Before Applying for a Personal Loan

A.  Assess your eligibility

While obtaining a personal loan may feel like a cakewalk nowadays, one must check and confirm the eligibility requirements of different lenders to avoid any confusion. The eligibility criteria for most financial institutions comprise of the following:

       Age - The candidate’s age should be at least 21 years while submitting the loan application and at most 65 years at the time of loan maturity.

       Nature of Employment – the candidate should be a salaried professional or a self-employed individual with a steady source of income.

       Income – The salaried professional’s salary should at least be INR 20,000 per month. In the case of a self-employed individual, the minimum annual turnover depends on the nature of the industry/profession.

       Work Experience - The candidate should possess a minimum of 1-year experience and have worked for at least six months at the current organization.

       Credit Score – Last but not least, the CIBIL score of the candidate should be 750 or more, which demonstrates an excellent debt-handling and repayment capacity. Although you may get a personal loan for a low CIBIL score, the lender levies a heavy interest rate in such cases.                                      

B.   Compare different offers

Another critical thing to emphasize while opting for a personal loan is checking and comparing offers of multiple financial institutions to acquire the best deal available in the market. Due to the simple fact that different lenders provide a personal loan at varied interest rates, affecting the overall repayment amount, the candidate should perform comprehensive research about all the relevant loan parameters before finalizing a lender. Additionally, one should also check the lender’s credibility and policies through customer reviews to make a well-informed decision.

C.   Evaluate your finances

Opting for a personal loan requires a well-planned strategy because as soon as the loan amount is disbursed, the repayment clock starts ticking with equated monthly installments (EMIs). Although a personal loan does not involve any security or collateral which might be seized if you fail to repay EMI in time, defaulting will impact your CIBIL score and debt handling ability. Hence, one should accurately compute the EMI amount beforehand to ensure that it does not exceed 50% of the monthly income for smooth repayments. Also, one should maintain a regular inflow of capital to pay the EMIs on time without delay to avoid the transformation of the personal loan into a financial burden.

D.  Check all the related expenses

A personal involves numerous types of expenses, and the candidate must be aware of all of them before signing the agreement with the lender. The expenses may include a hefty loan processing fee, documentation fee, foreclosure charges, or any hidden cost such as late payment charges, loan cancellation charges which might give you sleepless nights later. To avoid any such discrepancies, the borrower should carefully read all the terms and conditions before giving their final approval to the financial institution for the loan proceedings.

Must Read: Unable To Repay Your Personal Loan? Here Are 4 Things To Do

E.   Enquire about the application process

Another crucial factor to consider while opting for a personal loan is gathering information regarding the loan application procedure, required documentation, verification process, and disbursement period. While most lenders nowadays follow a paperless and contactless process wherein the borrower can fill and submit the form online, you must confirm it with the lender and the list of the supporting documents. Moreover, due to the nature of a personal loan, the KYC verification might take longer than usual, delaying the loan disbursement. As a result, one should also know about such details in advance to avoid any miscommunication.



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