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5 tips to follow before applying for a personal loan

Applying for a Personal Loan? Top 5 Tips to Follow

Life is full of surprises and you may need quick cash for some unexpected expenses, to renovate your home, for your dream wedding or to overcome a financial crunch. A personal loan is one of the available financial options which you consider to meet your needs. It is a kind of an unsecured loan, where you don’t put any of your collateral like your home or any property for availing the credit. Such loans are easily available in the market but sometimes come with a higher interest rate and unwanted terms & conditions.

There are various factors which lenders or banks consider before approving an unsecured loan. You should apply for the best one which is affordable, flexible in terms of repayment, hassle-free and of course quick. Here are some smart tips to follow before applying for a personal loan:

1. Analyze your Need:

Gauge you need

It is always advisable to borrow money from your family or friends as they usually don’t charge any interest. If there is no way out then think of a personal loan. But first, analyze how much money you exactly need and the tenure. If your repay power is low then opt for a personal loan with a longer repayment schedule. And, if you can repay the higher amount on monthly basis then opt for a shorter period. In any case, you shouldn’t borrow money more than that you require.

 2. Check Your Credit History:

Higher credit score means higher chances of loan approval

People usually apply for a loan without checking whether their credit history is good enough to get the personal loan approved. Normally, lenders and banks reject the loan application at the first instance if the credit score is poor. You should be confident of your credit score before applying for the personal loan. In the UK, there are various companies like Experian, Equifax, and Callcredit which charge nominal and provide your credit score. In India, CIBIL is the main agency for checking out credit score.

3. Online Personal Loans are Hassle-free:

Online personal loans are convenient

If you don’t want to go to banks or lender offices then online personal loans are good options. But you have to be cautious while applying for a loan online. Beware of fake online lenders who boast of offering you assured loans but charge you heavily. You should choose a reliable online lender for securing a quick and convenient personal loan. Please ensure there are no hidden charges, documentation charges, or any upfront fee. There are some lenders who don’t charge any fee in case of pre-closure.

4. Choose for a Lower Interest Rate and Flexible Repayment Tenure:

Lower interest rate will burn your pocket less

Compare APR charged by different lenders online. Go for the lender who is charging the lowest APR. Personal loans are unsecured loans so they are usually costly in nature. Most of the online lenders offer flexible repayment mode. Choose the tenure as per your convenience. The direct debit facility is desirable but you have to make sure there are sufficient funds available in your account on the EMI due date. If missed, then the lender may charge you high.

5. Bad Credit Personal Loans with No Guarantor:

There are various online lenders and brokers who offer bad credit personal loans on instant approval. They don’t ask for any guarantor or credit history check. They even assist you in improving your credit score.  If you have a bad credit history and are in need of a quick loan, then they are happily available to help you out from the financial crunch.

It feels good when the loan money gets credited into our account. We start spending it unnecessarily without giving any second thought. We forget that we have to pay off the loan amount with high interest. Be careful and repay it on time. Also, start saving money from your income today and keep it in a liquid state or in medium risk investment instruments to generate good returns. You can accumulate a good amount for a future emergency!

 

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