7 Tips to Help You Apply for a Personal Loan That is Just Right for You
A personal loan can provide you with the required financial assistance if you are ever in need of short-term funds. That said, if you pick the wrong personal loan, your overall borrowing experience, in terms of the services that you may receive, the cost of the loan, etc., may be significantly affected. Thus, it is necessary to do your due research and opt for a personal loan that is suitable for your requirements and repayment ability. Here are a few tips to help you apply for the right persona loan.
- Compare Interest Rates: Lenders charge interest on the principal that is borrowed by an individual. The interest rate that you are charged can affect the payable EMI. If you are charged a high interest, the overall cost of the loan will increase, and vice versa. For this reason, it is necessary to compare the interest rates offered by different lenders. You can do this either by checking the interest rate on the respective websites of banks/financial institutions or by way of a third-party aggregator website.
- Check the EMI Payable: When you borrow a personal loan, you are required to pay EMIs or Equated Monthly Installments to the lender. The EMI is calculated by taking the interest rate charged, loan amount borrowed, and the tenure of the loan into account. Lenders take your repayment ability into account when applying for a personal loan. Thus, it makes sense to calculate your monthly EMI payable. Ideally, the chances of your loan application getting approved are higher if the monthly EMI amounts to less than 40% of your monthly salary. You can calculate the EMI payable for a personal loan by using the EMI calculator tool. Most banks and financial institutions have this tool on their websites and prospective borrowers can use this tool for free to calculate the EMI. You can also check and compare the EMIs charged by multiple lenders through a third-party financial services website.
- Opt for the Right Loan Tenure: It is important to select the right repayment/loan tenure when applying for a personal loan. If you opt for a loan tenure that is too short, the payable EMI will be more. On the other hand, if you opt for a loan tenure that is too long, you will need to keep paying EMIs for a longer term.
- Look Out for Additional Charges: The interest rate is not the only charge that you should be looking at if you intend to apply for a personal loan. Banks/financial institutions may levy a range of the charges such as a processing fee, pre-payment penalty, documentation fee, etc. If you are not careful, these charges can significantly increase the total cost of your personal loan. Therefore, it is advisable to check the various charges that are levied by each bank/financial institution and analyse how much these charges may affect the cost of your loan. When taking a loan, it is in your best interest to read through the loan brochure to know the various charges and the terms and conditions of the lender. Doing this will help you avail the most cost-effective personal loan.
- Opt for a Loan with Repayment Flexibility: The most common way of repaying a personal loan is through EMIs. However, once you take the loan, you may want to make a pre-payment or part-payment towards the loan. Pre-paying a part of the loan amount can help you save a good amount of money, which you would have had to pay as the interest otherwise. In most cases, lenders who allow pre-payments/part-payments charge a penalty for the same. Hence, it is a good idea to check the repayment flexibility of the bank or financial institution.
- Check the Loan Disbursal Time: Once you apply for a loan, the bank or financial institution verifies your loan application along with the documents that you submitted. If the loan application gets approved, the loan amount will be disbursed into your account. The amount of time taken for loan disbursal will vary from lender to lender. While some lenders disburse the loan within seconds, others may take up to 48 hours. Also, pre-approved customers receive the loan amount much quicker than those who are not pre-approved for the loan. If you require the funds immediately, it is best to opt for a lender that has the lowest disbursal time.
- Pick Your Lender Carefully: A number of leading financial institutions and banks in the country offer personal loans with attractive interest rates. That said, your choice of lender will affect your experience as a borrower. Thus, make sure to carefully assess the benefits that are offered by the lender, customer care channels through which you can contact the lender, the promptness with which a lender answers your queries or provides assistance. It is best to not opt for a personal loan on the basis of the interest rate charged or the payable EMI alone. You should, ideally, look at the overall experience that you will have as a borrower if you were to apply to a particular lender for a personal loan.
Although it is important to compare personal loans offered by different banks/financial institutions, it is important to not make the mistake of applying at the same time to multiple lenders, given that it can reduce the chances of you being offered a personal loan at a good rate since lenders will assume that you are not likely to take a personal loan from them.
Once you find a personal loan that is suitable to your financial situation, you can apply for the loan through the lender’s official website, through a third-party aggregator website like BankBazaar.com, or by visiting the nearest branch of the bank/financial institution, based on your convenience.
If you apply for a personal loan through BankBazaar.com, you can compare multiple loan offers by different lenders on the same page, check your personal loan eligibility, and apply for a loan through the website. Upon approval of your loan application, the loan amount will be disbursed to your account immediately.