A personal loan is one of the most convenient forms of credit as it allows you to borrow a large amount without requiring any asset as collateral. Today, securing financial assistance via this channel is easier than ever as you can apply for personal loan. However, before you rush to obtain the funds you seek, evaluate the factors that are involved in this form of financing.
Here are five important things to consider before getting a personal loan.
Credit score and loan eligibility criteria
Your credit score, a 3-digit figure that normally ranges from 300 to 900, summaries your creditworthiness and history of paying off debt. The higher your credit score is, preferably above 750, the better are your chances of getting a substantial loan on affordable terms. Rectifying errors in your credit report and paying EMIs and utility bills on time are simple ways you can boost your score.
Once you have verified your credit score, take a look at the other personal loan eligibility criteria that you need to meet. These mainly include age and minimum salary requirements. Knowing whether you are eligible ensures that you don’t get turned down right away. This lets you save on time and also averts hard inquiries that are recorded by credit rating agencies every time you make a loan application.
Amount of financial aid you require and can secure
Personal loans can be used for any end purpose, be it a family wedding, an international holiday or a down payment for a house. Depending on what your financial goal is, you can decide how much financing you require. However, there are two things you need to be aware of. Firstly, you should only borrow an amount that you can repay. Secondly, lenders determine the amount they can give you based on your income and existing debt.
This involves two common methods, multiplier method and the fixed obligation to income ratio method. In the multiplier method, your net-take home salary is multiplied by a number between 9 to 18 to give you the loan amount. In the FOIR method, your amount is determined by estimating how much of your net income can be set aside for EMIs after factoring in other fixed obligations. The best way to compute all of this is to use a calculator like the Bajaj Finserv Personal Loan eligibility calculator. Opting for a Bajaj Finserv Personal Loan gives you financing up to Rs.25 lakh.
The interest rate you obtain from your lender
When you choose the right personal loan lender for you, you must be particular about the personal loan interest rates offered by your lender. This is because even a 1% interest rate difference can make a big difference when compounded over several years. For example, if you take a personal loan of Rs.10 lakh for 36 months at an 18% interest rate, your total interest payable amounts to Rs. 3,01,489. On the other hand, if the interest rate is dropped to 17%, the interest payable comes down to Rs. 2,83,496.
Two methods of ensuring that interest rates on your personal loan remain economical are boosting your credit score and choosing your lender wisely.
Standout features offered by your preferred lender
One of the main reasons why Bajaj Finserv stands out among other lenders is the powerful features that come along with its personal loan. You get a swift 24-hour loan disbursal upon your application being approved and can enjoy cost-effective features via the Flexi loan facility. This facility allows you to borrow from your approved sanction in parts and pay interest only on the amount utilized. In case you make a part-prepayment, this facility allows you to redraw the prepaid amount if you need the funds again. In this way, you can align your borrowing to your financial goals and not worry about paying any excess amount on interest.
How to go about repaying your loan
Before you sign up for a personal loan, you must make a detailed plan of repayment to manage your finances efficiently and avoid debt. This can be done by budgeting and setting aside a portion that will remain solely for personal loan EMI payments. When it comes to EMIs, Bajaj Finserv offers you a helping hand by allowing you to lower your installments with the Flexi loan facility. By paying interest-only EMIs through the tenor and the principal at the end, you reduce the monthly burden of EMIs by up to 45%. Additionally, with the Flexi Loan feature, you have the option of making part-prepayments at no added charge, should you find yourself with surplus liquidity.
Once you have carefully considered these points, head out to obtain the finances you require. If you are wondering how to apply for a personal loan, then all you need to do is visit your lender’s branch or get a personal loan online via your lender’s website. The best way to speed up your financing is to check your pre-approved personal loan offer. Doing so will give you instant approval and access to funding via a customized deal.
