With the rise of digital lending platforms in recent years, getting a loan has never been easier for the average consumer. However, passing Personal Loan eligibility from the abundant choices accessible now might be a daunting task.
It can be difficult, but choosing only one or two lenders is necessary because not all of them may not be reliable. Borrowers must read their loan agreements carefully.
Here are a few things to think about before applying for a Personal Loan:
- The Right Credit Score
The approval of a Personal Loan largely depends on your credit score. The creditworthiness of a borrower is represented by a three-digit number between 300 and 900, known as a credit score. It reflects your financial situation in terms of your outstanding debts, borrowing and payback history.
You will move closer to meeting Personal Loan Eligibility criteria when your Experian credit score is higher. The Experian score is a numeric value assigned by the credit beurea Experian, indicating the repayment capacity of an individual. It significantly impacts the loan terms (interest rate and EMI) and the loan amount that can be approved for you. Personal Loans with favorable terms are more likely to be offered to those with Experian scores above 630.
When choosing a Personal Loan provider, it’s important to keep all these things in mind. Your long-term financial well-being can be guaranteed by committing to a loan provider who provides both low-interest rates and a manageable payback schedule.
- Examine The Variations In Interest Rates
After a shortlist of loan options has been compiled, further research can be conducted to learn about the various terms and conditions to choose the best course of action. The interest rates offered may vary for all credit products.
You can read the frequently asked questions sections of each product thoroughly so you can compare processing fees and other key factors.
A word of caution for people applying for loans at different NBFCs, narrow down your loan options to just one lender to avoid too many hard inquiries on your credit score. This might affect a person’s Personal Loan eligibility because it signifies the loan provider that the borrower is a credit hungry user.
You can check for promotional deals or programs that can lower the final interest rate. Find out if you qualify for any to get a better interest rate and pay less each month.
- Determine The Best Lending Option
Both conventional financial institutions (banks, NBFCs) and innovative companies (Fintech, digital NBFCs) offer Personal Loans to borrowers nowadays. Traditional institutions like banks have stricter documentation requirements and longer processing times. So, they are not ideal when you need quick access to money.
Fintech and NBFCs require little to no paperwork because it is possible to quickly determine a customer’s creditworthiness online. This allows funds from loans to be disbursed quickly.
- Loan Repayment Tenure
The sooner a loan is paid back once it is taken out, the better. However, a shorter period for repayment transcends to higher EMIs due to the reduced number of installments.
Failure to repay a loan EMI on time can harm your credit score, making it more difficult to obtain credit in the future. When taking a loan, it is important to understand loan repayments and loan tenure.
- Fees Associated With Foreclosure And Prepayment
Foreclosure and prepayment fees are another group of costs that you might find while applying for a Personal Loan. These fees will be incurred if the borrower pays off the loan before the end of the agreed-upon term.
Examining the fees associated with various loan options will help you zero in on the one that gives you the most leeway in terms of making partial or full repayments.
Beforeapplying for Personal Loan, it’s a good idea to consider the loan provider’s reliability and customer service in light of your financial goals. Clix Capital is among the top new age NBFCs that has been helping Indians achieve financial independence.
There is no limit to options when it comes to applying for a personal loan, but finding the one that’s best for you takes some legwork. It would be best if you weighed the benefits and drawbacks of several loan products before deciding on one and then sign the paperwork for a loan that meets your needs with respect to interest rates, repayment terms, and loan terms.