What is a personal loan?
Personal loans are such loans then cover your planned and unplanned expenses. Many times some expenses come out even after planning very carefully. It can be a family’s medical emergency or a trip with friends, for which you do not have a budget. Such expenses can prove to be big for you. There is a shortage of money after the salary ends and unplanned expenses can put you in trouble. In such a case, personal loans can save you.
During the era of personalization and customization, there have also been many changes in personal loans. It takes care of your money needs. But now the lenders have gone one step ahead and they have designed such personal loans that meet your every need.
For example, if you want to rent a dream home and can also manage the monthly rent but are in a tizzy about the rental deposit, then you can choose a rental deposit loan. If you want to have a dream wedding and do not leave any shortage for the wedding day, then you can take a marriage loan. On the other hand, if you want to spend a little more money and see Northern Lights, then you can take a travel loan.
There are two aspects of personal loan, in which you need to understand everything to choose one. First of all, you can use this loan (unless you have taken a special loan) anywhere. The second aspect is that you do not have to pledge any documents related to property like cash, gold or anything else.
Why are there many types of personal loans in the market?
Now the question is arising in your mind that when you take a personal loan, what is the point of taking a special loan? The answer is very simple. Personal loans cater to your needs and the remaining loans cater to your special needs. In this, the terms of the term, interest rates are flexible. Due to the features and compatibility of these loans, lenders provide you the desired duration, interest rates and payment methods. For example, in the case of wedding loans, your monthly installments will be flexible and you can keep the amount low in the first 5 months because there are already a lot of expenses in the wedding. You can easily switch to regular EMI after big expenses are met.
What are the things to be remembered while applying a personal loan for the first time?
Check your credit score: A credit score is the factor that determines whether you are eligible for a loan or not. How much loan can be given at how much interest? If you are taking a personal loan for the first time, then obviously you will not know about the credit score. Not only this, you will also have no credit history. Make sure you have a good credit score. You can check your credit report for free or with a nominal fee with the help of a rating agency.
Understand commonly used financial language
You do not have to be a financial expert. But by understanding a few simple words, you can choose a better lender. You should know what EMI is, what is an interest compound. Be aware about how the loan lender calculates the interest of your personal loan, calculate the interest rate that is best for you so that you do not pay too much.
Choose the right lender
There are many banks and non-banking companies that offer personal loans. Everyone makes bigger claims than others. Therefore it is important for you to understand why to take a personal loan, what is the interest rate, how much flexibility in repayment, how soon you will get the loan amount, what are the repayment clause and foreclosure charges. Make sure to compare different lenders on these scales so that you understand all the rules before making any decision.
Check loan term
This is also an important factor when choosing the right lender because you get relief from the long loan period and the flexibility to repay the loan. Most lenders have a loan term of 24-36 months.
Keep documents in one place
All the documents should be with you so that the loan application process takes less time and the loan amount gets to your account quickly. If the documents are correct, then the money will come in your account the very next day. It is good for you even if the lender asks for less documents from you.
Other fees and charges
You should be aware of the processing charges on the loan and how it is calculated. Apart from this, know clearly about the total loan amount and various charges on repayment. Loan insurance is also an important factor. If you are unable to repay the loan for any reason, then the loan insurance only covers the loan amount.
Understand loan agreement
Read the terms and conditions of the loan carefully so that you do not regret it later. Since you are taking a personal loan for the first time, it is important that you find the best, cheapest, fastest and hassle-free repayment mode. You can sign up at eNACH. It is an electronic process that automates your payment through the bank. Apart from this, you can set a date by giving instructions to the bank, on which day the instalment is deducted from your account. This way you will not have to worry about delayed payments.
Why is the application of personal loan borrowers rejected for the first time?
– Low Credit Score
– Due to low salary or income category.
– Irregularity or disturbances in income documents.
– Incorrect or incomplete information in the application.
– Many loan applications or inquiries (this affects your credit score and loan eligibility)
Therefore, keep an eye on your credit score, choose the right lender, read the terms and conditions carefully and keep an eye on the documentation. In this way there is a very high chance of your first personal loan being approved.