10 Primary Principles for Procuring Personal Loans
At some point, one needs a personal loan or instant personal loan, depending on the immediacy of the requirement. If the need is pressing, an instant personal loan becomes necessary. In situations where the expenditure is planned, a personal loan serves the purpose.
Says Rakesh Kaul, CEO – Clix Capital, “Since there are numerous lenders in the market – banks, NBFCs and fintech firms – it is imperative to remember certain cardinal criteria to get the best deal. Therefore, prospective borrowers should check the interest rates, plus various terms and conditions, by visiting the sites of different lenders. Prior research is also essential to avoid applying to multiple lenders where one doesn’t meet the eligibility norms but triggers hard inquiries, which can hurt a borrower’s credit score and impact the chances of procuring a personal loan later on more favourable terms.”
Here are the top ten rules:
1. Ascertain the interest rate
One of the most crucial points, this can impact the EMIs (equated monthly instalments) and the loan tenure. Use a personal loan EMI calculator to decipher the most suitable options.
2. Choose the lender carefully
While banks, NBFC (non-banking finance companies) and fintech entities all offer personal loans, the terms and conditions differ between legacy lenders and digital natives. Although banks and NBFCs may purportedly offer lower interest rates, some terms could be unsuitable or a borrower may not be eligible due to specific norms. So check all these elements in advance. Also, another lender may have a more suitable offering. Therefore, check for the lowest interest rates as well as other charges and terms via loan aggregator websites.
3. Maintain a robust credit score
Personal loans are a form of unsecured credit. Consequently, before approving a loan, lenders will check an applicant’s credit score, which indicates a borrower’s creditworthiness. As credit scores range between 300 and 900, a score above 750 is good. A lower score either leads to the loan being declined or approved at a higher rate of interest. A healthy score can be maintained by always paying EMIs and credit card bills on time.
4. Avoid advance EMIs
Some lenders ask for one or two EMIs as advance from borrowers during loan disbursal. An advance EMI effectively raises the interest rate and borrowers will end up paying more than what has been mentioned. Accordingly, avoid advance EMIs and choose a personal loan app or lender that requires payment of regular instalments only.
5. Opt for a short tenure
Sometimes, borrowers could be tempted by a longer tenure due to the lower EMIs. But this will mean a higher repayment over the entire term since the outstanding attracts interest each month. If the EMI is affordable, short tenures are sensible to keep the total amount in check. Again, a personal loan calculator will help find the best options.
6. Ensure timely repayments
Paying EMIs on time is required to ensure a borrower’s credit score is not affected and he/she doesn’t pay a late payment penalty. Furthermore, an adverse remark in the credit score could hinder the chances of another loan being approved some time down the line.
7. Only approach a credible lender
As mentioned earlier, approaching different lenders simultaneously can end in multiple hard inquiries against the borrower. This makes it seem the individual is desperate for credit. As a result, lenders turn cautious about extending a loan to such a person. So check the eligibility criteria of diverse lenders and only then approach a lender where the norms are met.
8. Check for hidden charges
Find out if there are processing fees, penalties for late payment and other hidden/embedded charges that can inflate the total outgoing on any loan. If there are, budget these expenses or work out how to avoid them.
9. Ask about foreclosure fees
Sometimes, borrowers are in a position to prepay a loan. But if the foreclosure or prepayment charges are high, it isn’t worthwhile. One must find out relevant details in advance to avoid disappointment or select a lender with no prepayment charges or only a nominal fee.
10. Beware of 0% EMI schemes
Some lenders could lure borrowers with 0% EMI schemes in collaboration with retailers of lifestyle or consumer durable goods. Here, high file charges and processing fees are not revealed to buyers or only mentioned at the last minute. Thereby, the borrower pays interest without being aware of it.
If the above guidelines seem somewhat daunting, readers need not worry. They can procure a swift, hassle-free online personal loan from Clix Capital. Besides, if borrowers have the requisite documents ready, an instant personal loan could be disbursed within minutes. Best of all, a personal loan can be useful for varied purposes.
A Clix personal loan can be used for consolidating various debts into a single one, medical emergencies from unforeseen health events, home renovation, an offspring’s higher education or overseas studies, wedding expenses or funding a long-awaited vacation, among a plethora of reasons.
To be eligible for a Clix personal loan of up to INR10 lakh, applicants need to be between 25 and 58 years and have a credit score of 725 or more. Salaried persons should draw a minimum monthly income of INR25,000 while being employed in their present company for six months and holding at least one year’s total work experience.
After the KYC details such as Aadhaar and PAN card are cleared quickly via an online check, the sanctioned personal loan amount can be credited to a borrower’s bank account within 15 minutes or so, subject to standard terms. What’s more, Clix’s customised repayment options range from one to four years, ensuring borrowers can repay at their convenience. Thanks to Clix Capital’s instant personal loans, adhering to the top 10 guidelines given above then becomes a breeze.