Five Tips to Make the Most of Your Personal Loan
A loan is the best way to get leverage on your financial side. You can use this loan amount to cover your wide range of needs, be it personal or business-related purposes. The best part about taking a loan is that it provides you with a lump sum, charges you a nominal interest rate, and gives you a reasonable amount of time to plan your finances. Out of many lucrative loan options, one of the most popular options is going for a personal loan in India.
You can meet your personal requirements like financing a wedding, buying a house, or making a down payment using a personal loan online. But, a personal loan has its pros and cons, which you need to keep an eye on before applying for it. Do you want to know what are the things you should keep in mind while going for a personal loan?
Well, then adhere to this article because this article is all about personal loans in India, their benefits, and the steps you need to keep in mind to get the most out of it.
What is a personal loan and what purpose does it solve?
As said earlier, a personal loan is financial aid you apply for to cover your personal needs from a lender. The lender in return charges you with a specific rate of interest on the borrowed amount for a set period of time until the loan is repaid. Since it is an unsecured form of loan, you don’t need to pledge any of your assets to get a personal loan online. You can use this amount for any purpose as the lender doesn’t ask you for the reason for taking the loan.
A personal loan is the best option to look for as it can be substituted with other loans for any purpose, be it business, marriage, education, home, etc. A personal loan online is a faster method that requires no paperwork and is sanctioned within a day or two. Banks have come with this feature to help you save time and increase your convenience at the same time.
What are the features and benefits of applying for a personal loan?
A personal loan, like every other loan, comes with a bunch of benefits like:
- Approval and Disbursal Period:
The approval period of a personal loan is significantly lower as compared to the types of loans available in the market. Banks often prefer shorter approval periods to cut inconvenience, rigorous paperwork, and delays. The period of approval for a personal loan in India is about two days which can even be shortened depending on your credentials.
Similarly, as soon as your documents are verified and the loan is approved by the bank, the loan amount is disbursed into your account within some hours.
- Rate of interest:
The rate of interest on personal loans online is comparatively low than other forms of unsecured loans. The rate of interest for a personal loan in India starts from 8% per annum and goes up to 25% per annum. These rates vary according to one’s credit history, credit score, etc.
- No collateral:
As it is an unsecured form of loan, you as a borrower don’t need to pledge any of your assets to get a loan. Banks mostly don’t ask you for collateral to prevent unnecessary delays.
Five steps you need to follow to make the most of your personal loan:
Before applying for a personal loan online, you need to figure out these five things to give it a fair shot.
- Ample self-research:
Before you decide to get a loan, make sure that you do a lot of self-researching regarding all the offers available to you. In the chase for getting the best offer, you should also see the terms and conditions that are being provided to you. You can use a personal loan online calculator to calculate and compare different interest rates available to you. Make sure you contact the bank executives and your financial advisor before going for it.
- Increasing your credit score:
The more the credit score is, the better will be the offer. A good credit score not only increases your chance of getting a better offer but also helps you get the best interest rates and flexible repayment options. Remember, a credit score of 750 is the benchmark to get a good offer. You can start paying your bills on time and clearing your dues to level up your credit numbers.
- Checking your eligibility:
Before applying for a personal loan online, you should make sure that you precisely go through the eligibility criteria of the lender. Some of the important points to consider are your income and credit history. Make sure that you are on the plus side in these matters before you go for a loan.
- Checking additional charges:
Before you decide to settle for a loan with a lender, you should be aware of any type of additional charges. These charges include prepayment penalties, stamp duty, processing fees, etc.
- The necessity for applying for the loan:
Before you consider taking a personal loan online, you must thoroughly assess the reasons behind going for it. If the purpose of taking the loan is to finance your short-term needs like financing family trips or festivals, try to settle for as little as possible as it will cause a sudden financial burden. If you have to utilise the amount for making a downpayment, paying medical bills, or investing in the business, then taking a personal loan is justified.
Wrapping it up
A personal loan in India can be taken for a variety of reasons to cover multiple needs, however, certain things need to be executed to the most out of it. Proper financial planning, comparison of different interest rates, improving the credit score, etc. are imperative to get the best offer and make the most out of it.
If you liked this article, and you want to read more on personal loans, personal finance, different investment options, and several government subsidies, you should visit Piramal Finance.