One relies on personal loans to fulfill several purposes such as marriage, vacation, education, medical emergency, etc. As the loan gets approved and disbursed instantly, it’s being applied by most at banks or non-banking finance companies (NBFCs). But there are many who just apply without paying heed to the aspects that they should be aware of. These aspects could be critical in understanding the effect of interest rate to even comprehending the eligibility of a personal loan. Let’s discuss on several personal loan aspects that you should know to enjoy a tension-free repayment life.
Analysis of Income, Expenses and Liabilities
A personal loan would bring before you the responsibility to pay the EMI, abbreviated for Equated Monthly Installment, on time. To ensure a smooth repayment, it is vital you are aware of the money you earn, the expenses you make and liability, if any, you have. These factors should determine the loan amount you should go for to ensure not only the repayment goes smooth but also help you maintain the normal routine without any fuss.
Awareness of Credit Score
It is vital that you know the credit score that you must have to be approved a personal loan hassle-free. Credit scores are assigned by credit bureaus such as CIBIL, Equifax, Experian, etc, to individuals with a minimum repayment track of 6 months. Of the bureaus, it’s CIBIL whose score is preferred widely by the lenders in India. CIBIL score ranges from 300 to 900, of which you must have 750 and beyond. However, if you have a score of 700 to 750, even then the loan can be granted to you. Below 700 would mean you have to open a fixed deposit to get a personal loan. Those having no credit history can get the loan based on existing banking salary relationship or against the fixed deposit.
Be Aware of the Eligibility Criteria
To ensure you don’t face the rejection, you need to be aware of the eligibility criteria set by banks or NBFCs. Be aware of age, income, job stability, residence stability as sought by the lenders before applying for a personal loan. Understand the minimum income criteria thoroughly as many don’t do it and so have to face rejections. The minimum income, as sought by the lenders, does not include variable payments such as bonus or incentives. It’s the fixed salary that you earn is considered by lenders before approving the loan application.
Be Aware of the Loan That You Can Expect to Get
You may apply for a personal loan worth xxx amount only to see the lender is not willing to provide that much credit. So, if you check the personal loan eligibility calculator, which is available online, you can at least be aware of the loan that you can expect to receive. The calculator computes the loan amount based on your remuneration, expenses, credit history, etc. Lenders like to see the proposed loan EMI does not account for more than 50%-60% of your earnings.
Check Personal Loan EMI Calculator Before Applying
You must check the personal loan EMI calculator carefully so as to know the installments payable over the course of a debt. The installments combine both interest and principal portions to be paid every month to the lender. The calculator also shows the amount of interest payable to the lender. You should go online to find the calculator first before entering the loan amount, tenure and interest rate to determine the EMI and interest outgo. Having an idea of the repayment beforehand can help you make some adjustments to your routine and thus ensure a smooth repayment.
Compare Personal Loan Interest Rates Before Choosing the Deal
You must go online and compare personal loan interest rates of different lenders before choosing the one that offers the lowest of all. The lesser interest rates would decrease the repayment burden, helping you enjoy loan rather than making you curse the same. There are websites that keep in place the interest rates of different lenders for you to compare them and choose the right one.