During the pandemic, many people had to take pay cuts, many lost their jobs, and many had to go through a medical emergency. During such difficult times, cash is needed instantly. However, due to lack of cash, many people cannot meet their financial needs.
So, the best option to meet your urgent cash needs is a personal loan in these difficult times. Whether it is a small amount of Rs. 8000 or you want to supply big needs with a Rs. 2 lakh loaneverything is possible with a personal loan.
Personal loans are unsecured loans taken out to meet needs such as education, marriage, travel, and medical emergencies.
According to data from RBI (Reserve Bank of India), in September 2021, the total outstanding amount of personal loans was Rs. 29.18 lakh crore, and in September 2020, they were Rs. 26 lakh crore, that is that is, in one year they increased by 12.1%.
Tips to know before taking out a personal loan
When it comes to taking out a personal loan, it’s essential to know what you’re getting into.
This will not only help improve your chances of getting a personal loan, but you could also get a loan at a lower interest rate.
Here are some of the tips you can consider before taking out a loan:
1. Assess your needs
Personal loans should not be taken lightly, as they involve incurring monthly payments (principal and interest) to the lender.
Non-payment of monthly charges could have serious consequences.
So, before availing a Rs. 2 lakh loan, individuals are advised to assess their needs and assess whether they are in need of a loan.
2. Check credit score
Credit score is one of the essential factors that lenders will evaluate before approving the loan, as personal loans are unsecured.
A credit score indicates the creditworthiness of the borrower. Thus, it is essential to know your credit score before applying.
Individuals can maintain a credit rating by paying their dues on time.
Usually it ranges between 300 and 900, and between 750 and 900 is considered good.
A low credit rating means you may need to consider a Rs. 2 lakh loan with a higher interest rate.
3. Compare interest rates and other fees
There are a variety of personal loans available, so be sure to compare interest rates before choosing one.
Even a slightly higher interest rate can increase your equivalent monthly payments (EMI).
Applicants are advised to consider other fees, such as processing fees, prepayment fees, and penalties charged for default.
Individuals can avail a Rs. 2 lakh loan with an interest rate of 1.5% to 2.5% per month, with no foreclosure/prepayment charges and a small processing fee.
4. Choose a reliable lender
Since taking out a personal loan can represent a huge financial commitment, choosing a reliable lender is crucial.
Make sure the lender has a good reputation and is known for providing quality products and services, has excellent customer service, and is ready to help you with any questions or problems you may have. to have.
Also, read the terms and conditions of the loan agreement carefully to make sure you understand what you are agreeing to.
5. Assess eligibility criteria
Individuals are advised to assess the lender’s eligibility criteria before taking out a Rs. 2,000,000 loan. This will increase the chances of your loan being approved.
All lenders have different eligibility criteria.
An Indian citizen who is a salaried worker above 21 years old and has a minimum salary of Rs. 15,000 to Rs. 18,000 per month can apply.
A Personal loan can help meet a range of financial needs, such as consolidating debt, financing a home improvement project, or covering wedding expenses.
When you apply for a personal loan, the lender will assess your creditworthiness to decide whether or not to approve the loan application.
If you have a good credit history, you may be able to get a lower interest rate on your loan.
If you’re thinking of applying for a personal loan, it’s essential to compare interest rates and terms offered by different lenders, weigh the pros and cons of each option, and choose a reliable lender. This way, you can select the loan that suits you best.
You can learn more about personal loans by visiting the EarlySalary website, one of the emerging platforms for personal loans.