5 Dos and Don’ts for an Instant Personal Loan

A personal loan is a multipurpose credit option that helps borrowers tide over unexpected expenses and manage big-ticket purchases. In addition, the availability of an instant personal loan allows borrowers back varied financial requirements like paying out medical bills, business expansion, household repairs, etc.

The credit option bestows borrowers with lucrative benefits. However, the entire borrowing can prove counterproductive if borrowers are not acquainted with the intricacies of the credit option. Hence, to ensure a hassle-free application process, one must have a well-rounded idea regarding the do’s and don’ts of taking a personal loan.

Know the Do’s and Don’ts While Applying for an Instant Personal Loan

Here are the following do’s and don’ts that borrowers must follow in order to avail an instant personal loan: 

Do’s

1. Compare lenders

The first and foremost thing borrowers must do is compare different lenders and their offerings. This will help them choose the right lender and secure better loan terms. Borrowers must settle for a lender offering a competitive personal loan interest rate. An affordable interest lowers the EMI liability and the loan expenditure. Borrowers must also check the eligibility criteria and choose one whose requirement matches the best. Moreover, borrowers must choose a lender that offers repayment flexibility and faster processing.

2. Choose suitable loan tenure

Loan tenure has a significant impact on the interest outgo and EMI payouts. Hence, borrowers must choose the repayment period carefully. Otherwise, it can affect the repayment spree and jeopardise one’s financial well-being. A personal loan comes with a flexible repayment period. A longer loan tenure will reduce the EMI burden, whereas a shorter loan tenure reduces the overall interest outgo. Those who have to manage other financial liabilities must choose a long loan tenure. On the other hand, those who want to reduce the overall interest out-go and close the loan account faster must choose a shorter loan tenure.

Borrowers must chalk out a repayment plan and list their financial obligations; it will help them decide on suitable loan tenure. Moreover, using a personal loan EMI calculator will also help borrowers choose an optimum loan tenure.

3. Compute overall cost

Besides seeking a competitive interest rate, borrowers must consider the hidden charges, including foreclosure charges, loan processing fees, prepayment penalties, etc. These charges contribute to the loan expenditure. Therefore, not considering the hidden charges can lead to an unnecessary monetary burden.

4. Opt for online application process

Borrowers must always try to opt for the online application process. The provision of online applications is faster and more affordable. It saves the turnaround time of borrowers. Moreover, borrowers can check the status of their loans and receive notification regarding the EMI pay-outs.

5. Read the fine print

It is very important for borrowers to be well-acquainted with the fine print of the credit option. One must not opt for a personal loan in a haste. Borrowers must do their research and go through the terms and conditions of the lender to make an informed decision and escape unpleasant surprises. It will also assess the perks if included.

Don’ts

1. Avoid applying for too many loans

When borrowers make a loan application, lenders enquire regarding the same with credit bureaus. Multiple loan applications in a short span will lead to several ‘hard enquiries’, which have an adverse impact on the credit score. A lower credit score makes borrowers’ repayment potential questionable, making it difficult for them to receive loan approval. Hence, borrowers must refrain from availing of too many loans.

2. Don’t forget to check the CIBIL score

CIBIL score is an indicator of a borrower’s repayment history. It is a significant parameter that helps lenders determine borrowers’ repayment potential. A lower credit rating can lead to the rejection of loan applications. Hence, before applying for an instant personal loan, borrowers must check their credit score and try to maintain a score of 750 and above, as it will help them receive quick loan approval. Moreover, a higher credit score will help borrowers secure a lower interest rate.

3. Refrain from over-borrowing

Borrowers must not opt for a loan amount they cannot afford to repay on time. Over borrowing can strain one’s finances in the long run. Applying for a higher loan amount can also result in the rejection of a loan application as lenders do not have any collateral to fall back on. Therefore, borrowers must have a precise calculation of the amount they need. Then on the basis of their income status and other planned and unplanned expenses, they can opt for a loan principal that they can easily manage to repay over the loan tenure. Furthermore, borrowers must consider their debt-to-income ratio while obtaining a personal loan.

4. Never miss out on EMI pay-outs

Borrowers must not miss out or delay the EMI payments. Lenders levy hefty penalties if borrowers default on making on-time EMI pay-outs. Furthermore, missing out on monthly instalments lowers the credit score. And a lower credit score hinders one’s possibility to receive quick approval for the loan amount.

Hence, borrowers must ensure timely payments and set reminders regarding the same. It is very important for borrowers to be financially disciplined to receive quick loan approval. In this regard, one must okan a repayment strategy as it will help one repay loan amount without undergoing financial burden.

5. Don’t borrow from unknown lenders

Nowadays, individuals come across several platforms extending instant personal loans. However, now all such deals might seem lucrative but can lead to a scam, steal one’s personal credentials and rob one of their finances. Hence, it is advised to opt for lenders after evaluating their credibility and avoid too-good-to-be-true offers. Borrowers can visit the official website of different lenders and go through customer reviews.

To sum up, an instant personal loan enables one to tread over urgent monetary needs. However, borrowers can make the most of the credit option only when they consider they focus on the do’s and don’ts while making an application for the credit option. Not knowing the do’s and don’t will lead borrowers to unnecessary monetary burden.

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