A personal loan is among the simpler, more time-efficient ways to borrow money. This is mainly because it is unsecured, so you don't need to pledge assets to qualify for the sanction. In fact, lenders today offer fully personalised offerings that can be easily availed within a few minutes. Online applications and disbursals also ensure that the money is also available to you just as quickly.
However, even with 100% online provisions, applying for a personal loan has a few complexities that can be easily overlooked. To help simplify this process and minimise errors, here are a few dos and don'ts to remember when applying for a personal loan online.
- Check the lender's eligibility criteria
Before you apply for a personal loan, it is very important that you first check the lender-specific eligibility criteria. Failing to do so can lead you to overlook basic requirements needed to qualify for the loan. This can result in rejections as lenders are often quite strict with their protocols. A rejection in this instance can adversely affect your credit score, so it is really important to check the terms. Some of the common criteria are based on your age, employment status and monthly income.
- Figure out the loan amount that you require
It is important to know exactly how much you require before you apply for a personal loan. Remember to borrow only as much as you truly need, even if you qualify for a higher sanction. This way, you don't pay interest on a higher sum that you didn't have the need for.
- Scout for offerings with additional features and benefits
Before you apply for a personal loan, do your own research by comparing various loan offerings. You can start by comparing their main elements: loan amount, tenure, and interest rate. Then shortlist them based on the availability of any additional features. These can help you handle repayment better, reduce the cost of borrowing, or even help you get the money you need on flexible terms.
A good example is the Bajaj Finserv Flexi Personal Loan variant. Here, you can borrow from your sanction whenever needed, and as many times as you want, while paying interest only on the amount you actually withdraw. This feature also allows you to part pre-pay your loan and helps reduce your monthly instalments by up to 45%*.
- Don't shop for offerings solely based on personal loan interest rates
While it is worthwhile to consider options with low personal loan interest rates, not all offerings may actually benefit you or help you save more. In your pursuit to lower your interest outgo, you may sacrifice repayment flexibility or the option to part-prepay cost-effectively, ultimately resulting in a tougher experience. You may also want to compare the other fees and charges to estimate the overall cost of your loan. Hence, shopping for a loan by keeping only the interest rate in mind isn't the right way out.
- Don't forget to evaluate the terms and conditions of the loan
Reading the fine print of any personal loan is absolutely key to protecting your finances. Here, lenders include clauses and detailed breakdowns of the fees and charges applicable to you apart from information on interest rate resets and foreclosure. Knowing these details thoroughly is crucial to borrowing smartly as it helps you identify terms that may not be in your best interest.
- Don't borrow unnecessarily to fund non-essential expenses
Remember that a personal loan is a financial responsibility and should be treated like one. For this reason, you should choose to borrow when you need the funds for an essential expense. Good examples of this include medical emergencies, home renovation or high-interest debt consolidation. Leisure expenses like shopping using a personal loan should be avoided as this simply amounts to higher costs in the long run.
Keeping these pointers in mind is sure to help you enjoy an easy loan application while borrowing smartly. To truly enjoy a comfortable borrowing experience, read reviews and explore some of the best personal loans available to you. This way, you'll find that options that stand out from the rest.
For instance, the Bajaj Finserv Personal Loan offers up to Rs.25 lakh at a competitive interest rate while giving you repayment flexibility. You can opt for a tenor ranging up to 60 months to keep your EMIs budget-friendly and even enjoy instant approval on your online application. So, get started now and take the time to make an informed decision.