Leading a comfortable life is like a dream come true. Sometimes, you might require extra help to make that happen for you and your family. To manage your regular finances or to have a financial backup for various life events like marriage and childbirth, you can take a personal loan to fulfil your financial requirements.
In the current situation where the spread of the Covid-19 virus is causing a financial crunch for many, opting for personal loans is a good choice. However, you must know that you have to prove your creditworthiness to secure a personal loan. The benefit of these loans is that they do not require any security.
You must understand the following pointers before you plan to borrow a personal loan:
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Application and Eligibility
The first and foremost requirement is that all the documents are well in place for the loan. With the facility to apply for a personal loan online, many banks have made it a painless procedure. You can either visit the bank or fill it out online after reading the terms and conditions of the plan. The process of personal loan requires these four steps to be followed:
- Filling the complete loan application
- Processing of the documents
- Underwriting as required
- Funding by the lender
You will be declared eligible for the loan only when you have a good credit score. The other factors that fall under the eligibility criteria are age, regular income, repayment capacity, and many others. Make sure you consider the eligibility criteria of the bank you choose to apply for a personal loan.
Reason For the Loan
Personal loans are a popular choice, as they are not specific to a particular reason. You can take it for home renovation, medical emergencies, wedding festivities, and travel and education purposes. By knowing the purpose of a loan, you can ensure that the loan amount won’t get spent unnecessarily. You can only use the Equated Monthly Income (EMI) calculator to evaluate your eligibility for the amount you need. The process will be less tedious for you if these factors are analysed and managed well in advance.
Choice of part-payment, Prepayment, and Foreclosure
When you research and compare personal loans, you will learn that there are three ways you can follow for loan repayment. Different lenders charge fees according to the variations in time for repayment. Some banks do not allow prepayments, while those who do, charge an additional fee. The interest charged will be less for the part payments when the amount is paid before the scheduled EMI.
Foreclosure refers to the complete payment of the loan before the tenure of the loan ends. Here too, you will be charged a fee as per the bank’s rules and regulations.
Choice of Bank/Lender
While you find many banks and lenders offering personal loans, you must carefully examine their offers before you zero in on any of them. You must not select the first offer that comes your way. It is crucial that you research the market for better deals.
When you get a personal loan, you must ensure that it does not cause a financial burden. You will find various lenders providing different interest rates while others charge you with a non-refundable processing fee.
Since the selection of a plan requires your time and attention, make sure you do not make any decisions in a hurry. Choose a reputable bank like Axis Bank, which you can rely upon. The bank is known in the market for its seamless personal loan application process and quick disbursal of the loan amount based on your eligibility.
The right use of a personal loan can enable you to achieve your dreams and wishes. While the loan helps you realise your dreams, you must ensure regular repayments on time. Failing to do so may cause a drop in your credit score and can result in complications for other loan requirements in the future. So, be careful when you apply for a personal loan to deal with your finances.
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