Do you seek a loan in times of financial emergency? A loan with no collateral requirement and flexibility to use the loan amount seems like a distant dream. A personal loan is a dream come true for borrowers. With so many advantages by its stride, it has become the most sought-after loan in the lending sector.
A personal loan is unsecured and doesn’t require any collateral attachment against the loan amount, offered for a short duration and at a low-interest rate in comparison to other loan products. However, this is subject to the credit score and borrower’s debt history. The loan can finance one’s wedding, education, home improvement projects, vacation, or consolidation of debts.
Ten basic rules to get the best deal for personal loans are:
Check the interest rates
Interest rate is one of the crucial factors that determine the overall cost of the loan. One must compare different lenders to get the best offer. One can avail of facilities like an online EMI calculator to estimate interest rates for varying loan amounts and tenures.
Choose the lender carefully
Most banks offer several banks, financial institutions, and NBFCs. Fintechs like LoansJagat offer a comparative platform where the borrowers can compare different lenders for their offerings in terms of interest rate, loan amount, loan tenure, EMI, and other charges and choose the one which best fits their needs and requirements.
Maintain a good creditworthiness
The credit score defines the borrower’s creditworthiness and reflects their past repayments. Lenders prefer to give loans to borrowers with good credit scores. It is thus advisable to maintain a good credit score by making repayments of existing debts on time. The credit score ranges from 300-to 900. A score over 750 is considered good.
Make timely repayments
Lenders prefer those borrowers who will return their money on time. Making timely repayments prevents one from falling into a debt trap and also helps in enhancing one’s credit score.
Don’t go for EMIs in advance
Few lenders ask borrowers to make EMI payments in advance. It results in an overall increase in the interest rate, and the borrower ends up paying more by the end of the loan tenure.
Go for short tenures
Long loan tenures mean that the borrower will have to pay the liable interest for a long time. The borrower must opt for short loan tenures and choose a comfortable EMI to make the repayment schedule easy. Short loan tenures help save on some money that would otherwise have gone as interest.
One must not act desperate and refrain from multiple loan applications with different lenders. The lenders smell something foul and reject the loan application. Rejection causes a downfall in one’s credit score.
Check for hidden fees
Apart from the interest rate, the lenders also charge hidden fees and penalties for making late repayments, loan processing fees, prepayment charges, etc. These cumulatively increase the cost of the personal loan. One must read the loan agreement thoroughly before zeroing on the lender.
Check for foreclosure charges
When one prepays the personal loan before the end of the loan tenure, lenders levy foreclosure charges which increases the overall cost of the loan.
Research for schemes with 0% interest
Zero per cent interest rate schemes are a way to lure customers. It comes along with hidden charges, and the borrower ends up paying more by the end of the loan tenure.
A personal loan is an excellent source of funds in emergency times. It can be used as a debt consolidation loan and financing one’s vacation. One can get a personal loan in Delhi and other cities through comparative platforms like LoansJagat and grab the most affordable personal loan deal.