5 Personal Loan Tips Everyone Must Follow
Category: Personal Loan
Acquiring personal loan is one of the best ways to bear the expenses of all the essentials or uncertain occurrences. On the other hand, it is equally important to ensure that the loan you are applying for is right for you and can help you overcome the situations in the long run.
Before you get tempted to bite the bait of ‘no strings attached’ personal loan, we recommend the five most important personal loan
tips everyone must follow to avoid personal loan debt trap of high interest rates and or unduly repayment. Here is a sneak peek at the top five rules one must follow before applying for a personal loan.
Tip 1: Opt personal loan for emergencies only
Taking a personal loan in NCR may appear like an extremely convenient loan option since there may be minimal paper work and no sureties. Such loans are approved rather easily too since they are likely to be issued to limited amounts and for limited periods of time. However, taking a personal loan should be your last option. This is because after credit card loans, personal loans are the most expensive loans that are available in the market. Take a personal loan only if you feel that it will rescue you from more expensive debt.
Tip 2: Inspect interest rates
Every bank varies on interest rates of loans from each other. It’s prudent to compare various schemes before simply applying for a personal loan
. Always remember, a big loan for a long period may reduce the amount of monthly repayments, but the interest paid over this period is much larger than the interest on loan you borrow for short term.
Tip 3: Do not send multiple applications
Explore as much as you can and determine the right loan prior to applying, in spite of sending loan application with the hope that one of the lenders would definitely accept it. Each application for personal loan will elicit the search for credit report. By sending number of applications in a limited tenure, lenders will doubt that you are creeping around for loan amount and might be planning a con. This will give them a reason to reject your personal loan application.
Tip 4: Limit what you borrow
If personal loans have made our life much easier, then why a considerable section of borrowers falling into debt traps? The answer is borrowing beyond means. Personal loans should never be taken without an objective assessment of future cash flow and other financial needs. One needs to have a solid plan to pay the debt back and not become its lifetime slave. Make sure you opt for short-term personal loan as a personal loan carries a higher rate of interest as it is an unsecured loan.
Tip 5: Concentrate on the foreclosure clause
Banks and financial institutions providing personal loans do not admit partial repayment of the loan. As the higher rate of interest is charged, banks absolutely want the borrower to continue paying their equated monthly instalment or EMI for the full tenure. Review your bank charges for prepayment especially if you are planning to pay off your loan in lump sums at some point in time in the future.