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Questions You Should Be Asking Before Availing a Personal Loan

  • Highlights

  • Guage the loan amount you need to take

  • Find out the loan repayment tenor in advance

  • Ask about the rate of interest and other charges

  • Decide whether to take a loan from a bank or NBFC

An unsecured mode of finance, personal loans serve multiple objectives. Be it going on a vacation, undertaking home renovation, buying an expensive household item or funding marriage related expenses, a personal loan is a prudent financing option. However, there are certain questions you need to ask before availing this loan.

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How Much Loan Do You Need?

Prior to availing a personal loan, it’s essential for you to figure out the loan amount. Gauge your needs to know your exact requirement. Being an unsecured loan, your credit score plays a critical role in determining the loan amount. Opt for a loan that you can repay easily without compromising on your other financial goals. Ideally, the EMIs shouldn’t be more than 40% of your monthly income.

What’s the Loan Tenor?

The tenor varies across lenders. Most lenders offer flexible tenors to ensure you can repay the loan as per your convenience. Compare the tenors offered by various lenders online before taking a call and opt for the one that best aligns with your goals and repayment capacity. The tenor you choose affects your monthly EMIs. To estimate monthly EMIs, you can use Personal Loan Calculator and plan your tenor accordingly.

What’s the Rate of Interest?

This is another vital question you need to ask before availing an online personal loan. The rate of interest has a say on the monthly EMIs. Compare interest rates offered by different lenders online before taking a final decision. The rate of interest depends on your credit score, loan amount and tenor among others.

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Things to know before applying for a Personal Loan

Should You Opt for a Loan from a Bank or NBFC?

While earlier, banks were the primary source for personal lending, today many non-banking finance companies (NBFCs) are also offering personal loans. Adopting an innovative approach, some of the leading NBFCs are offering flexi personal loans, where you need to pay interest only on the amount you utilise from your approved loan limit.

Do You Have Any Pre-Existing Loans?

If you are serving any pre-existing loan, the same will have a direct impact on your repayment capability. Lenders will factor this while sanctioning the loan amount. While applying for a personal loan when you are serving pre-existing loans and liabilities, make sure you’ve paid the EMIs of the present loans on time.

Additional Read: Things to Avoid While Taking Personal Loans

Comparing various offerings along with understanding the fine print of the loan document will help you get a good deal.

The content of this document is meant merely for information purposes. The personal loan features mentioned in this article are subject to updation, completion, revision, verification and the same may change materially based on policy revisions. For more details, please visit our Personal Loan terms and conditions page here.

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