Big personal expense around the corner? Anxiety is a given prior to taking your first loan. While taking a personal loan looks straightforward, there are multiple factors to bear in mind. While this format of loans is an avenue for further self-exploration, it demands self-discipline during pay-back time. These loans are extended for a defined period, enabling customers to remain focused on paying off the loan within a set time frame.
Before getting into the nitty-gritties of purchasing a personal loan, let’s take a closer look at the time of choice.
When should I choose a personal loan?
You want to buy something expensive. You want to purchase something you waited for all this while. Amidst all the glitz, lies a challenge - time constraint. If you have faced a similar situation, personal loan is here for the rescue. Loan disbursal is quicker owing to minimal documentation process.
Escape the ‘collateral damage!’ Consider this, you are asked for assets to be pledged as collateral for a personal loan, but you don’t possess any. In the interests of the lenders, your account will be analysed and verified to judge the risk rate, followed by decisions on approvals.
CIBIL credit score remains the most significant metrics to decide on loan requests. Before applying for a personal loan, ensure your credit score reads at least 750 points. Higher scores, higher the chances of loan approvals. Bear in mind, with each rejection, your credit score dips further.
Here are some of the tips you need to bear in mind before making a personal loan purchase.
Research for the Best Alternative
Like any other product, financial products need closer attention before making the all-important purchasing decision. Ask around for best prices and shortlist a few builders. After the shortlisting process, compare your Annual Percentage Rates (APRs) – indicates the cost of a loan while considering the interest payable, other charges, and payments falling due.
Don’t apply for multiple loans at once
Every time you apply for a loan online, most applicants will leave a footprint on our credit record, which is verified by the lenders before approving a loan. Multiple applications on your record can make you seem desperate or in financial crisis. As a result, lenders will see you as a credit risk and your loan will fail to be processed.
Borrow Large Amount of Money
In general, the larger the amount of loan, the lower the interest rate. This is due to the way some lenders price their loans. Most times, borrowing the extra funds can save you from high interest rates. The EMIs tend to be lower when your borrowing is huge.
Keep a check on peer-to-peer lending
Are you an anti-financial institution? If your answer is yes, then you might look to borrow from peer-to-peer, like Zopa. The site, a marketplace for social lending, links borrowers and lenders.
Although there are multiple purposes to purchase personal loan, there lie challenges ahead. Keeping a few simple pointers in mind, you can ensure the loan process becomes smoother. For more loan facilitation offers, switch to Loanz Financial