Best Tips to Take out Personal Loans
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Best Tips to Take out Personal Loans

  • Highlights

  • Check for the best interest rate available

  • Carefully consider the terms and conditions of the loan

  • Choose fixed interest rate over floating interest rate

  • Monitor your CIBIL score and improve it for the best deal

There are times when you might face a situation when you are in urgent need of money, and need to take a loan. Personal loan is the ideal product to choose in such situations, as its biggest USP is that its end use is not restricted. You can take out a personal loan for medical emergencies, weddings or even to fund an exotic holiday.

Personal loans are usually disbursed quickly and have short tenors. One more important aspect of such loans is that they are unsecured. This means that you do not need collateral for the loan.

All these benefits make personal loans the ideal financing choice for all your needs. Bt choosing the right personal loan lender can be difficult, with many options available in the market. Here are some tips that will help you make the right choice.

Check out for the Real Interest Rate

Once you start looking for the loan, you will find all the lenders are highlighting very cheap interest rates. But when you take the loan, the interest rate can be significantly higher. The reason is that lenders showcase their best rate which is calculated on so many factors like credit score, loan amount, tenor etc. So first check your requirement. And then shop for the best rate as per your requirement.

It is always advisable to look around for the best rate as per your requirements. One lender with cheapest home loan rate might have quite high personal loan rate. Another lender might offer good rate only when you opt for a particular amount. So check out the best rate before apply for the loan.

Additional Read: A Sep by Step Guide for Applying For a Personal Loan At Bajaj Finserv

Read the Fine Prints

Interest rate cannot be you only criteria for selection. You need to carefully consider the terms and conditions as well. You may want to pay off the loan before tenor. Are there any prepayment charges for that? Look out for any other hidden charges that might actually increase your cost of borrowing. There might be things like arrangement fee, handling charges and many more. All these charges actually add up to your interest rate make the Real Interest Rate Much higher.

Flexi Loan Explained

Things to know before applying for a Personal Loan


Fix Your Rate

Is your loan interest rate fixed or variable? Some lenders do offer variable rates. The rates might come down but also can go up during the tenor. As personal loans are for relatively shorter period, it is best to opt for fixed interest rate. In this way, you can fix your monthly payment. And you can budget your expenditure easily.

Monitor Your CIBIL Score

It is a very important factor to maintain good CIBIL score. It represents your credit worthiness that is reflecting how much risk lenders perceive when giving you the money. So if your CIBIL, also called the credit score, is poor, you will be paying higher interest rate. Generally Credit score above 750 to 900 is considered good score and anything below 500 is considered negative. To get the best possible rate, you need to maintain your credit score. And to do so make sure you pay all your debts in times, do not miss any repayment. Also at the closure, make sure the debt is closed completely.

Lenders are willing to provide the personal loan as it is beneficial for them. And there are so many of them. Consider all options first and then follow our tips to select the best rate for you.

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