Things to Keep in Mind Before Taking a Personal Loan
Posted on Friday, April 28th, 2017 | By IndusInd Bank
Personal loans are the fastest and the most convenient form of credit today. Fast approval coupled with speedy disbursal and no collateral make it the credit instrument of choice during emergencies. People also have been using these loans for home renovation, financing weddings, education and sometimes even vacations. However, before taking a personal loan, there are a few things you should keep in mind.
Processing and Prepayment Charges
Processing charge is what the bank charges you for processing the loan. It is a fixed charge but varies from bank to bank. So, if possible, you should select a lender whose processing charges are less. Some lenders charge you a fee if you pay back the loan in advance, i.e. prepay the loan. This varies from lender to lender and you should prefer a lender that does not charge you in case you want to prepay.
Calculation of Interest and Penalty Charges
You should always try to understand the interest calculation because the rate of interest might be a fixed one or a percentage of your loan balance. A fixed interest rate helps in reducing the interest burden of the loan. In case you fail to pay an instalment, you have to pay a penalty. Always read the terms and conditions of the loan carefully to understand what these charges are.
Consider Your Need, Not Eligibility
While deciding the loan amount, you should only consider your need. You might be eligible for a loan of Rs. 20 Lac but your actual need may only be Rs. 10 Lac. Taking a loan of Rs. 20 Lac may put unnecessary burden on your finances.
Check Your Eligibility and Obtain Your CIBIL Score
Always check your eligibility for a particular loan beforehand and have your CIBIL score handy. A good CIBIL score is important for smooth approval of the loan.
Check Interest Rates and Compare Loans
Different lenders may have different rates of interest; therefore, it is always best to compare the loans of different banks. This allows you to secure the best rate of interest for your personal loan .
With these tips in mind you would be able to shop for the best personal loan that fulfils your requirements. IndusInd Bank offers personal loans that are easy to obtain and offer attractive interest rates. Visit the IndusInd Bank website and apply online for a personal loan today.