A personal loan will come handy when in need of money immediately. Individuals may come across financial crises no matter how well they are prepared.
The situation may arise when our savings on investment are not enough to meet the present financial situation.
The financial situation can be anything to meet unexpected expenses, a dream holiday, school or college fees, wedding expenditure, home improvement expenses or even purchase of consumer durables.
Here are 5 things to consider before availing personal loan
1) Credit Score
Before applying for personal loan check your CIBIL score. The interest rate may vary depending on your score, means if you have poor credit score, banks may charge you high-interest rate.
Note that any default on the part of EMI reduces your credit worthiness
2) Late charges
Know about late charges fees. Or the possibility of pre-closing the loan without being charged. Most of the banks do not allow pre-closure of the loan so in such cases do not avail long duration term.
Understand APR (Annual Percentage Rate) i.e. How much the loan would cost in interest per year.
3) Processing Fees
Many banks do charge a fee for processing the application. Compare the fees with competitor banks. In Most cases, government banks charge less when compared to a processing fee of private banks.
4) Seasonal Offers
During festive seasons, banks offer interest rates or provide some waiver or may not charge a processing fee. Check with latest offers from the bank.
5) Loan amount
Avail loan depending on the need. Higher amount will make you pay EMI for longer duration and paying interest will also be added load.
In the loan industry, it is said that interest rate on a personal loan is much higher. A personal loan can be secured and unsecured which can be availed with minimum documentation and with less hassle.
Sometimes, a personal loan interest rate can be as high as 24 per cent per annum, depending on the creditworthiness of the individual and the bank.