Among all short-term funding options that households have access to, personal loans have turned out to be one of the best. These advances are useful for all financing needs and do not come with any restriction from the lender, which make them suitable for financing both professional and personal expenses. Further, their long tenures allow the borrower to repay at ease while keeping the EMIs affordable. An increasing demand for these loans has also pushed the lenders to provide financing online, which allows individuals to access financing from the comfort of home. Their affordability with low rates of interest is another thing to look forward to when availing financing.
Nevertheless, borrowing the advance also vests the borrower with certain responsibilities and puts the lender’s finances as risk. It is thus always best to be prepared with a few trips and tricks up your sleeves when availing financing to get the best offers and manage the finances suitably. Let’s check out a few of them.
Useful Personal Loan Tips to Keep Up When Borrowing
1. Avail financing only when you are in need
As personal loans are easily available today with minimum eligibility requirements to fulfil, one might get tempted to avail the advance at the first notice. People may also avail funding just to keep the financing cushion intact if they have made significant expenses in the recent time. However, this is not a healthy practice and for the sake of practising financial discipline, you must take care to avail the advance only when you are in need.
Further, it is best to borrow only as much amount as you require since over-borrowing creates unnecessary financial burden while also bringing down your borrowing metrics. If you are financially eligible and have chosen the lender right, you can avail the loan of up to Rs.25 Lakh to meet big-ticket funding needs with ease.
2. Know the additional fees that come with the loan
When understanding the cost of your loan, it is crucial to consider. And know in detail about the additional charges that the advance attracts. These loans may come with a few mandatory fees such as processing fees, penal interest, bounce charges. While a processing fee is payable for every loan. The last two fees are subject to the occurrence or non-occurrence of the related events.
However, with some lenders, you may be required to pay additional fees as well. It is thus best to know such charges involved. With some best lenders in the market. Many redundant charges are eliminated, while others are levied at nominal rates, which keeps the cost of your loan in check.
3. Keep your credit score high and history well-maintained
The importance of credit score is irreplaceable when availing a personal loan. It is a true indicator of one’s creditworthiness and allows lenders to gauge the risk associated with a borrowing profile. To receive easy approval for your advance, it is wise to take necessary steps that keep the score at a minimum of 700.
For improvement in your credit score and history, you can take necessary steps like making timely EMI and bill payments. Borrowing up to 50% of your income, and the likes.
4. Choose a small tenure for loan repayment
As personal loans come with an extended tenure of up to 5 years. Borrowers get to repay the advance in easy EMIs. However, while the maximum available tenure keeps the EMIs, it consequently increases. The total interest payable, thus making the loan costlier than initially expected. Choosing a short tenure is thus recommended even if it means paying higher EMIs.
5. Know available loan features in the market
When looking for a loan offer, it is wise to be well-informed regarding the available features that different lenders provide. It allows you to choose the best loan option and keep loan management favourable.
6. Know all eligibility and documentation requirements
Before applying for your loan, it is also wise to check the eligibility and documentation requirements for the loan. To make the loan accessible, lenders today keep both personal loan documents required and eligibility criteria to a minimum.
When applying, make sure to meet all the requirements and keep the necessary documents ready for streamlined approval. As a standard requirement, you need to be in the age range required by the lender, which varies based on the financier you choose. You also need to be a salaried employee working with a reputed organisation. And be a residing citizen of India carrying a minimum credit score of 700 when applying for the loan. Keeping these tips in mind when availing financing. Allows you to choose a personal loan offer that best suits your financial standing. Once you have availed the loan, make sure to pay the EMIs in time and in full. It shall further help build your credit history and improve your chances of availing the advance in the future.