Follow these rules while applying for a Personal Loan

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A personal loan is one of the most common credit facility availed by the people in the time of crisis. A personal loan can be borrowed for a number of reasons like marriage, education, travel, business expansion, or medical emergencies. This loan can be availed from both banks and NBFCs, who lend personal loans at comparative interest rates. These lenders offer the loan through both offline and online mediums. Also, it can be availed by both salaried and self-employed individuals, provided one fulfils all the eligibility and documentation conditions. However, before opting a personal loan, ensure following the below-mentioned steps for a convenient and authentic loan process:

Choose the right lender: Before opting a personal loan, it must be kept in mind that the loan is provided by a number of lenders like Banks and NBFCs. Thereby, it is important that one chooses the lender that is best amongst all. For this, ensure researching about the lender before opting for one. Gather the details about the interest rate and the terms and conditions, and choose the lender that offers the loan at the lowest interest rate with the most feasible terms and conditions.

Calculate the interest rate in advance: Making a financially wise decision is an important thing to do before availing a loan. As mentioned above, the interest rate on the personal loan varies across lenders, thus, apart from choosing the lower interest rates. It is equally important to calculate the interest rate that one will be required to pay on the loan amount during the loan tenure. Also, ensure knowing whether the loan is calculated on the reducing balance method or on the flat balance method. For this one can use the personal loan EMI calculators.

Be aware of other charges: When it comes to the charges on a personal loan it is only the loan EMI that comes to one’s mind, that is calculated on components like principal amount, interest rate and tenure. However, there are other charges involved in personal loans as well. These include the prepayment fee on a personal loan that is charged if one pays the loan in advance. Lenders also charge a processing fee on personal loans that may vary across banks. The borrower should thus be aware of all these charges to participate in a transparent loan process.

Don’t run after too many loan lenders: While the first rule requires one to research about various personal loan lenders. One must understand that there is a difference between enquiring about lenders and approaching them. While inquiring about lenders involves knowing the interest rate and terms and conditions without directly being in contact with the lender, approaching involves direct contact with the lender. Approaching too many personal loan lenders at the same time may impact one’s credit score adversely. This is because too many loan requests may make you seem credit hungry in the eyes of the creditors. The best, however, to deal with this situation is to make a loan enquiry through loan aggregators or through various online market places that are available online.

Thus, on a concluding note, it must be understood that making a financially wise decision while availing a loan requires one to follow these steps.  Taking a loan is a big responsibility that one avails in times of financial needs. Thereby, one must ensure that one avails the loan responsibly and with proper measure so that the loan does not become a liability indeed it should conveniently fulfil the purpose for which it is borrowed from the lender. 

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