Personal loans are the most preferred credit option when it comes to instant finance. In India, the rise of small loans online has increased from 23% in FY 2017 to 28% in FY 2018. This instant credit facility comes with minimum paperwork requirement, fast disbursal of the sum, and zero-collateral. The best part of a personal loan is that it has no end-usage restriction. Hence, it can be utilised for a variety of purposes such as home renovation, overseas education cost, wedding, vacation or medical emergencies.
A borrower must check on a few facts before applying for such credits. Here is a list of the 5 factors that you must consider before applying for small loans online –
Table of Contents
1. Check The Credit Score
As personal loans are unsecured, lenders will scrutinise your CIBIL report which includes your repayment track record. It reflects your creditworthiness and ability to repay the loan on time. As there is no asset to mortgage, lenders have nothing to fall back to in case you default.
Thus, a good credit score of 750 or more and a clear repayment history displays your credibility as a borrower. Any discrepancies in your credit report or detection of any unscrupulous credit behaviour can lower the chances of getting your loan sanctioned. This is how your CIBIL score is important for personal lending.
2. Interest Rate
A personal loan interest rates is determined by a lender based on the assessment of your profile risk. To assess this risk profile – lenders factor in your monthly income, creditworthiness, and CIBIL score, among others, before sanctioning your loan. Thus, when applying for a personal loan, compare the interest rates of multiple lenders and opt for the one who provides the most suitable set of repayment benefits.
You can consider availing a personal loan from NBFCs like Bajaj Finserv who offer such advances with attractive interest rate. Besides, you would benefit from instant loan approval with minimal documentation and fast disbursal of the sum. Furthermore, you also get to enjoy a flexible repayment tenor for convenient repayment. Check the easy-to-meet personal loan eligibility criteria to gain approval and disbursal quickly.
Bajaj Finserv also provides exclusive pre-approved offers that make procuring loans quick and hassle-free. These pre-approved offers are applicable on advances like personal loans, home loans, etc. and on numerous other financial products. You can check out your pre-approved offer by sharing a few necessary details like your name and contact number.
3. Loan Tenor
The repayment tenor of personal loans ranges from 1 to 5 years. While lower tenor means higher EMI amount, it also brings down your interest cost. Therefore, opt for a shorter tenor if possible. However, you must never apply for a credit, which you cannot afford to repay or which may stress your finances. In such cases, opt for a longer tenor. Plus, use an EMI loan calculator to determine your monthly payments in advance and avail the advance accordingly.
4. Processing Fees
Processing fees are expenses incurred while availing a loan. It includes –
- Loan processing charges
- Late payment fees
- Prepayment and foreclosure charges, and many more.
Before narrowing it down to a lender, make sure to check these fees. Opt for a lender like Bajaj Finserv who offers nominal fees on part prepayment and foreclosure and guarantees no hidden costs. Here is how you can apply for a personal loanand fund your big-ticket expenses.
5. Pre-Payment and Foreclosure Charges
Most lenders could charge you with a hefty penalty if you part prepay or foreclose the loan amount before the end of the tenor. Usually, these charges range between nil to 6% of the outstanding principal and are permissible only after the completion of a specified period in your loan tenor. By prepaying a personal loan, you are saving on interest cost, which could be a matter of concern for your lender and thus, the charges. Therefore, if you are planning for small loans online, ensure that your preferred lender charges minimum or nil prepayment or foreclosure charges.
These were the 5 most important things to consider before availing a personal loan. Keeping these in mind, before applying for one, makes the procurement process quick and hassle-free.