INSUBCONTINENT EXCLUSIVE:
Authors: Jordan
A personal loan can be a
It funds you during an urgent cash requirement
However, before borrowing, one must assess the terms and conditions of the loan - what the loan costs, what the tenure is, what the late
payment fine is, and so on.To get the ideal deal on a personal loan, make sure to keep these factors in mind.Assessing Credit Score Prior to
ApplicationMost financial institutions check a borrower's credit score when assessing their creditworthiness and repayment capacity
They also only vet individuals with a certain income level before considering an application
There is a possibility for an application to be rejected on account of a poor or average score
Since your credit score changes every month, it is wise to get it keep a tab on it before applying for a loan
Just Google for "free credit report" and get yours for free in two minutes.Interest Rate and TenurePersonal loan interest rates are
typically higher than other loan products such as home loans
This is because firstly they are given without any guarantor in most cases
It's an unsecured loan where no security needs to be pledged to the lender.Banks can charge anywhere between 11 per cent and 16 per cent on
an average, whereas NBFCs and financial institutions may charge a higher rate
So make sure to work out the rates and given that these floating rates factor in around 2 per cent to 3 per cent rate fluctuations.The
interest rate and tenure can impact the size of the EMI
A longer tenure means easier EMIs; a shorter one means lower interest payments
A good credit score can also ensure you get an attractive interest rate.Processing ChargesMost often we ignore such charges thinking them to
But these costs can escalate with the size of the loan
Check the same as well as other associated charges like GST, one-time fee and more.Late Payment ChargesDelayed payment of EMIs or rejection
of ECS for insufficient balance may prove to be rather costly in cases of personal loans
Some NBFCs and banks have rather high charges for late payment, sometimes as much as 5 per cent to 10 per cent of the EMI
Plus on an ECS rejection the source account's bank will also charge you for the default.Pre-Payment and Foreclosure ChargesMost people opt
for personal loans due to urgent money requirements, which means they may be capable of paying back large portions of the loan in due time
So it's wise to check whether the said loan gives you the option to pre-pay or pre-close to reduce your liability
Some lenders charge a fee for pre-payment or pre-closure
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