5 Things Need To Consider Before you Apply For Personal Loan

A personal loan is a type of funding that an individual can utilise to pay private needs. The purpose of a personal loan can be a wedding, a vacation, buying heavy appliances, paying the big loan, or a medical emergency. Eventually, it is an unsecured loan, implying you don’t have to put up any security or collateral. 

A personal loan can range in scope from 50 thousand to 25 lakhs. However, before you apply for personal loan, you should consider the points below:

1. Borrow only what you can afford to repay

An individual must borrow the amount they can repay – that’s all. We always recommend taking a loan for the correct purpose and evaluating your needs because getting an amount that you cannot repay within the time will hamper your credit score. 

2. Maintain a good credit score

A good credit score or CIBIL score shows your creditworthiness. An individual must keep an ideal credit score for a loan, which is 750 – since a lower credit score can decrease the chances of loan approval. So, always repay your past loan and EMIs on schedule and retain an excellent credit score.

3. Compare all interest rates of online personal loan

Before applying for a personal loan, compare all the interest rates offered by other banks or financial institutions. This can help you select a personal loan at lower interest rates according to your requirements.

4. Understand terms and conditions

Many people sign contracts in a hurry and without reading the documents, which might lead to problems in the future. Every borrower should know the terms and conditions while applying for a personal loan. Check whether there is any hidden cost. Reading policies can save you from unexpected charges. 

5. Keep your tenure short

Long repayment is attractive and seems easy, but you will have to pay the higher amount. Try to keep your tenure period shorter so that you do not need to pay an extra amount. Assess your budget and manage it carefully before applying for a personal loan.

Eligibility Criteria for Personal loan

● Applicant age should be a minimum of 21 and a maximum of 60

● The monthly income should be at least 15 thousand.

● Work experience of minimum one year

● The credit score should be 750 or more.

Check Other Factors for Eligibility 

• –Your location: Location does matter when you apply for personal loan. If you’re from the metropolitan area, your probabilities of getting a loan are sounder.
• –Your Income: If you are earning a higher wage – you are eligible for high loan values.
• –Existing Loan: If you are already repaying debt and opting for another one, the chances of getting a new loan approval can be lower.
• –Credit Score: A high credit score increases your chances of getting a loan. The credit score should be 750 for a loan.
•  –Assets and liability: Having more detriments than the assets can reduce the chances of loan approval.

Documents required for a Personal Loan

The documentation for a personal loan is very simple. You can also apply for an online personal loan with minimal documentation. Bank prefer an electronic mode of payment for a personal loan.

-Valid ID proof: PAN Card/ Adhar Card/ Voter ID Card/ Driving license/ Passport

-Valid Age Proof: School or College Marksheet/ Adhar card/ Birth certificate/ Voter ID/ PAN Card/ Passport/ Driving license

-Passport size photo

-Correctly filled application form

-Address Proof: Electricity or utility bill/ Ration card

-Income Proof: Bank statement of last 6months and salary slip of last 3months, offer letter if you are a salaried individual, form 16 of the current year. 

-Income tax return (ITR) if you are self-employed and proof of your business.

Benefits of taking a Personal loan:

1. Taking a personal loan can improve your credit score. To retain a fair credit record, make repayments promptly.

2. You can use a personal loan to repay your big loans.

3. Personal loan usually takes less time for approval.

4. You can employ the credit value for any purpose; there are no restrictions.

5. You can apply for a personal loan online with minimal documentation, too.

6. There is no need for any collateral applying for a personal loan.

Final statement:

A personal loan can help you reduce the financial burden; there is no need to postpone your plans. However, you can easily apply for personal loan online with a few clicks. There are no restrictions on personal loan eligibility, and you do not need to pay any security amount or collateral.