April 19, 2024

Business Bib

Business & Finance Blog

4 Important Things to Know While Opting for a Personal loan

3 min read

Applying for a loan? Over the past two years, personal loan disbursements are witnessing an exponential phase. Having pertinent information about the entire process improves chances for loan approval. Broad knowledge about credit score, rate of interest, and charges can work wonders. Here are some essential points to ponder:

Maintain the right level of creditworthiness:

There is a high level of uncertainty for a personal loan. For this reason, your lender will first evaluate your creditworthiness. Based on your creditworthiness, he shall consider or reject your loan application. Why people count more on payday loans these days?

A credit score is the best representation of creditworthiness. It is the best reflection of credit repayment history. CIBIL or credit score has an optimum range of 300 to 900. Anything above 750 is ideal for creditworthiness.

A fall in the credit score reflects bad debt management. At times, it may reflect contribute towards rejection of your loan application.

Maintaining a good credit score is simplified with due payment automation. Next, keeping a control on the use of different cards helps you to maintain a good credit history. Also, you should place a threshold limit on your credit card usage. You may simply restrict it not to exceed more than 30 percent of the overall credit utilization.

What are the interest rates being offered in the market?

A good amount of internet research can help you in finalizing your loan lender. Different lenders will offer you a loan at different rates of interest.

Do not forget to check how your interest will be calculated. When you opt for loan repayment through EMI’s, your reducing balance plays an important role.  Check whether your interest rate is being calculated in accordance with your reducing balance or not. For this purpose, you have online personal loan EMI calculators at your assistance.

By comparing interest rates from different lenders, jot down those that offer lower interest rates than others. Many financial institutions display their interest rates through their websites. This helps you in selecting loan schemes claiming lower interest rates. It further facilitates your EMI repayment process easier.

Did you check all the applicable charges?

For availing any loan, there are underlying charges. It thus becomes mandatory for you to go through all these charges in addition to the interest rate. Both interest rate and applicable charges vary widely from one lender to another. Some of them are:

Processing Charges:

The moment you step in for any loan, you are bound to pay processing charges. It is usually charged in the form of percentage, which you need to pay along with every payment process.

Prepayment charges:

You are bound to pay prepayment charges when you accomplish all your loan amount repayment before the term ends. Depending on the amount of your loan and paid EMI’s, your lender may help you with a prepayment fee waiver.

Late payment charges:

Late payment charges are applicable when you miss on paying your EMI within its stipulated time. It is better if you take a look at these charges so as to be cautious with EMI payment tenure.

Avoid artificial offers:

Don’t ever fall prey to gimmicky offers or any related schemes. When you critically analyse such schemes and offers, you will come to know that you are actually paying higher here. At times, such schemes may feature floating interest rates, which may increase substantially with time.

Although opting for a loan may appear to be a simple process, a wrong step in the wrong direction might be troublesome. Check personal loan by Upwards for an optimized, facilitated, client-friendly and secured loan services.