There are times when you might face a situation when you urgently need money and need to take a loan. A personal loan is an ideal product to choose in such cases, 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 critical 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. But 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 the real interest rate
Once you start looking for a 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 the basis of several many factors such as credit score, loan amount and tenor. So, first check your requirements 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. A lender with an attractive home loan rate might have a relatively high personal loan rate. Another lender might offer a reasonable rate only when you opt for a particular amount. So check out the best rate before applying for the loan.
Read the fine print
The interest rate cannot be your only criteria for selection. You need to consider the terms and conditions as well carefully. For example, you may want to pay off the loan before tenor. Are there any prepayment charges for that? Also, look out for any other hidden charges that might actually increase your cost of borrowing.For instance, there might be things like arrangement fees, handling charges and many more. All these charges add up to your interest rate make the real interest rate much higher.
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 a relatively shorter period, it is best to opt for a fixed interest rate. In this way, you can set your monthly payment. And you can budget your expenditure easily.
Monitor your CIBIL score
It is a very important to maintain a good CIBIL score. It represents your creditworthiness and reflects the risk lenders perceive when giving you the loan. So, if your CIBIL is poor, you will be paying a higher interest rate. Generally,a credit score 685 or higher to 900 is considered a good score and anything below 500 is deemed negative. So 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 time, do not miss any repayment. Also, at the closure, make sure the debt is closed entirely.
Lenders are willing to provide the personal loan as it is beneficial for them. So, consider all options first, and then follow our tips to select the best rate for you.
If you are looking to avail of a personal loan, consider the one offered by Bajaj Finserv. With instant approval and quick disbursal, you can get the funds you need without any hassle. Apply online today.
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