Important Tips You Must Follow When Taking Your First Personal Loan

There can be multiple needs for obtaining credit. It may be required for buying a house or a car or any other big expenses which need to be managed with financial help. Credit is a financial tool which is powerful enough to meet your financial needs. There can be many types of loans which can be obtained. It is essential to understand that any loan comes with responsibility attached to it and thus, one must consider all aspects before obtaining any such type of loan.

Among this, Personal Loan is a form of credit that can be obtained with no securities, and thus, it attracts debtors easily.

What is a Personal Loan?

The Personal Loan is an unsecured loan which can be obtained without any asset as security. It is a financial help which can be used to meet any of the personal financial expenses including but not limited to your daughter’s marriage, car purchase, education or medical expenses, payment to the house broker or for any other household item or furniture purchase.

The loan is easy to obtain because the approval is fast and it does not require any securities. The rate of the Personal Loan may vary from institution to institution and is generally high when compared to general loans. For example, the rate of interest of HDFC Personal Loan remains in between 11.25% to 20.00%, and for ICICI it is in between 11.25% to 22.00%.

Even though it is quite similar to any other loan because debtors need to pay back the credit amount in fixed instalment just like other loans, it differs in repayment. When you obtain a Personal Loan like ICICI Personal Loan, you must go through lending terms and conditions of the particular institution which may slightly vary when compared to other institutions offering the credit. A smart borrower always checks critical aspects of the loan before applying for credit.

Here are some tips which you must follow when taking your first Personal Loan:

  • Pick out the best – There are many financial institutions which offer Personal Loans. It is essential to compare financial products of different financial institutions before picking the one which suits you, the best. When it comes to obtaining a Personal Loan, you must check out the current preferential rates of the banks, interest payable, true and total cost of a loan, any other charges applied.
  • Check your credit score – Credit Score is a numerical rating provided to any individual on the basis of the debt repayment of the previous loan to the credit ratio. The Credit Score is also often based on the regularity of the credit repayment. With a high Credit Score, you are most suitable for obtaining a Personal Loan from any of the top institutions. Before you could apply for any loan, you must check your Credit Score to know whether your application will be considered or not.
  • Charges for early repayment – Even though Personal Loan can be repaid only with a periodic monthly instalment, many financial institutions provide flexibility to repay the credit amount early. In some cases, charges are applicable when you wish to pay off early debt and thus, it is essential to confirm these charges before signing a particular deal for the Personal Loan.
  • Check your eligibility criteria – Before you could actually apply for any loan, you must make sure that you are eligible for the loan consideration. You must be in between the age of 21 years to 60 years to obtain a Personal Loan because this is the age limit criteria for any of the popular personal loans like ICICI Personal Loan. There are certain other guidelines attached to it which make you eligible for obtaining a Personal Loan. This must be wisely considered before applying for to any institution.
  • Pick up the best payment protection insurance – When you are obtaining a Personal Loan, many banks will ask you to obtain insurance so that your debt amount can be covered if you are unable to meet them due to some personal reason in future. It may cost you more than your instalments, and thus, it is wise to check out the list of various offers and discounts which are available for such insurance before picking out the final one.
  • Calculate the true cost of the loan – Flat interest discounts and offers can be a misleading metric often obtained by banks. These rates can be a method to make look the loan attractive. A smart borrower always calculates the final amount to be paid back for the loan rather than sticking to the flat discounts deals offered by banks.
  • Check out the other charges – When you obtain a Personal Loan, it comes with a processing fee attached to it. Different institutions may charge different processing fees and thus, it is also essential to check this before you could finally get into an agreement for your loan.    •    Choose the loan amount wisely – One must decide the amount of credit wisely depending upon the final requirement. With this, it is also essential to identify the repayment capability before obtaining Personal Loans. The final loan amount of the loan must be based on the loan repayment ability and income status.

Conclusion:

It is quite easy to obtain a personal loan for tackling emergency financial issues, but it is essential to understand that any loan comes with a sense of responsibility to pay back on a timely basis. One must obtain a loan when they have suitable repayment capability. Each bank’s loan offer differs from the other as it has rules and regulation attached to it, which must be thoroughly considered.

Following the discussed tips can however help you obtain easy and suitable Personal Loan without any issues.

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