15 Quick Tips to Follow Before Taking a Personal Loan

Half a decade back, a loan was a last-ditch solution among people for resolving financial issues. On the contrary, personal loans today is a standard tool for funding the requirements/ expenses like wedding ceremonies, long-due vacations/holidays, down payments of cars, houses, etc. Unsurprisingly, many lenders are providing instant personal loans today. But it would be best if you think twice before applying for and taking personal loans. Here are some tips that are worth following before taking up a personal loan:

1. Assess your Needs: Never jump into the pool of debts by taking up unnecessary personal loans.
2. Do Ample Research: Check for all the lenders possible online as well as offline. Shortlist the lenders according to their interest rates, testimonials as well as terms & conditions. Finally, select the best among them.
3. Check your Credit Score: Credit score is the numerical representation of your credibility. Higher the credit score, lesser the interest rates you pay for personal loans. A credit score of 750 or more is better for getting the best interest rates on a personal loan.
4. Analogize the Interest Rates: A small change in interest rate can make a considerable increase/decrease in the amount you need to repay to the lender.
5. Be Wise in Choosing the Interest Type: Always select the reducing interest rates over flat interest rates.
6. Check if you Fit in The Personal Loan Eligibility Criteria: Lenders set standards for instant personal loans focusing on your income & employment. If you fit in these criteria, you can quickly get the loan.
7. Enquire About Prepayments: Prepayment saves you from high-interests and prolonged pressure of completing the loan.
8. Avoid Placing Multiple Loan Applications: Making multiple loan applications ultimately decreases your credit value as you seem desperate to lenders. Also, this leads them to think you are incapable of repaying the loan.
9. Set a Limit for What you Borrow: Never borrow the amount that you find hard to repay. Think before you borrow and save yourself from the debt traps.
10. Double-Check your Application, Especially the Credit Report: Any incorrect calculation in your credit score may affect it negatively. Check for any false information in the application and correct them.
11. Read the Loan Documents Thoroughly: Go through all the terms and conditions mentioned in the loan document. Don’t leave any clause unread. It ensures your safety and security.
12. Keep Possibly Short Loan Tenure: Short loan tenure reduces the repayment amount by decreasing the personal loan interest rates but increasing the EMI. Choose tenure that results in affordable EMI rates.
13. Get the Terms and Conditions for The Loans Printed on Paper: Don’t fall for the alluring traps of lenders meant to attract borrowers. Get the information about everything right from the interest rates, schedules, principle amount to prepayment charges on paper from the lender.
14. Keep Some Money as a Part of Emergency Funds: Emergency funds will save you in times of financial crisis to pay your EMIs regularly and maintain your credibility in the market.
15. Don’t re-Apply for The Loan Before Six Months: Once your loan gets rejected, work on the cause of rejection. Approaching other lenders before six months can affect your credit score.

Personal loans may leave you in debt. So, follow the above tips and be cautious before taking a loan from a moneylender.