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If suddenly money is needed? Whether there is a medical emergency in the house, the cost of children’s education, or the repair of the house… Personal loan is a very easy and fast solution in such situations. Money comes to your account only in a few clixes or on a phone call.
But the easily it gets, the easily it can become a big net. Many people take loans only by watching the advertisement of ‘lowest interest’ and later get upset by being caught in hidden charge and difficult terms.
Therefore, if you are thinking of taking a personal loan, then before applying to any bank, do check these 5 things.
1. Your CIBIL score (your financial horoscope)
The first thing that the bank sees before giving you a loan is your CIBIL or credit score. This is a number of 3 digits that suggests how responsible you have been in paying your old loan and credit card bills.
- Why is it necessary? If your score is above 750, the bank considers you a reliable customer. This not only approves your loan quickly, but also increases the chances of getting a loan at a low interest rate.
- What to do: Before applying, check your CIBIL for free online. If this is low, try to improve it first.
2. Interest Rate (not just go to advertisement)
The advertisement of every bank says that they are giving loans at the ‘lowest’ interest rate. But this is not true. The interest rate is of two types- fixed (which remains the same for the entire duration) and floating (which varies according to the market).
- What to do: Do not trust just one bank. Compare the interest rates of at least 3-4 banks. Ask them clearly what rate (fixed or floating) and what percentage of loans you will get.
3. Hidden charge (where the devil is hidden)
The real burden of the loan is not just interest, but there are many small charges which together form a large amount. Must pay attention to these:
- Processing fees: This can range from 1% to 3% of the loan amount.
- Pre-payment charge: If you want to repay the loan ahead of time, the bank also imposes a penalty on it.
- Late Payment Fee: EMI fined for late.
- What to do: Ask the bank in writing about all these charges.
4. Loan duration (mathematics of EMI)
This is the time in which you have to pay the entire loan.
- Long period (eg 5 years): Your EMI will be small, but you have to pay a lot of interest overall.
- Short period (eg 2 years): Your EMI will be big, but you will save a lot of money on interest.
- What to do: Choose a period whose EMI can be paid without any hassle, but try not to long.
5. Terms and conditions (whoever reads)
The whole story is hidden in the fine letters of the loan agreement. We know that it is difficult to read it completely, but at least consider these things:
- How the interest rate will be calculated.
- What are the rules related to pre-payment.
- What a fine will be imposed for violating any condition.
- The saying is: “Caution took place, accident happened.” This thing is absolutely accurate in terms of loan.
Personal loan is a very useful thing, if it is taken wisely. Keeping these 5 things in mind, you can not only get a good deal, but can also avoid many future troubles.
