Here's What You Need To Bear In Mind Before Taking Your First Personal Loan

Several banking and financial institutions offer loans that you can use to tide over emergency expenditure needs. A personal loan is one of the most popular financial products in this space. Getting a personal loan in Pune for the first time is not that difficult, after all.

However, you must inform yourself about the repayment and interest rates before signing on the dotted lines. The loan is repaid in small monthly EMIs, and the tenure of the loan can range from months to years.

Personal loans are unsecured and do not require collateral, making it the easiest way to access credit. In addition, the process of taking a personal loan has become much faster and hassle-free as it can be secured through banking apps without any paperwork.

Personal loans in Pune and Mumbai are pretty popular and in demand as the city is bustling with youngsters and working professionals who often confront a financial crisis. They might need money for a business project or to meet a financial crunch.

Research Your Lender

Indian markets are full of lenders and scammers who offer loans on cut-throat interest rates. You might receive frequent calls and messages from sales representatives. Take your time to do proper research and compare services. If looking for a personal loan in Pune, use keywords to reach better results.

Red Flags: Extremely Lower and No-Interest Offers:

Here’s where the research is valuable. Avoid getting into 0% EMI schemes at any cost. They often involve huge processing fees, which might further put you into debt. Some of the best personal loan providers customize loans divided into categories ranging from 8k to 5k and further classification for metro and non-metro salary structures.

Rule of thumb: EMI of personal loan should not exceed 10% of your net income.

Is Your Loan A Need or Desire?

DO NOT take a personal loan for your desires or wants just because it is available; you might end up repaying loans your entire life. Instead, look into your finances, and if a loan or EMI payment is not letting you meet your other expenses, you might have to reconsider.

Game Changer: Credit Score

The credit score is an essential factor in determining whether you are eligible for a personal loan. Your credit score can range from 300-800, with a score above 750 considered healthy. A credit score is determined by:

  1. Repayment history

  2. Type of personal loan

  3. Credit history

  4. Total debt

Look For Miscellaneous and Hidden Charges: Apart from the interest you pay on a loan, scan your loan agreement for any miscellaneous charges like processing fees, foreclosure charges, etc.

Repayment Of Loan

Check the monthly repayment amount using the EMI calculator to ascertain the amount you can bear, which can help you make an informed decision. You can rely on companies for the best personal loan from banks that do not charge a gobbling amount of interest.

Document Check List

As most lenders have an online process of applying for a loan (which takes less than 10 minutes, by the way), be ready with those docs while filling out a loan application.

If you are a salaried person or self-employed, you might want to keep your:

  1. Salary slips

  2. 3-6 months of bank transactions

  3. ITR or Profit and Loss Statement.

 Financial Intelligence

Be financially intelligent while applying for a loan like principal Be amount, interest rate, loan tenure, repayment, foreclosure, etc. This will give you a better understanding of the terms and conditions, and you can use this info to educate people further.

 Loan Insurance

Yes, you heard it right. You can get your loan ensured too so that your kin or relative are not left with financial liabilities in case of an adverse event. This is not a mandatory step, but it would be a good idea as a first-timer to look into the nitty-gritty.

 Conclusion

You might want to assess your assets to income ratio to check your financial bandwidth. You might also want to check the lender's credibility by looking at their performance statistics.

 

Personal loans can be one of the best solutions for your financial problems, but you must take them for all the right reasons. It might help you from many unwanted situations of financial crunch, urgent or instant cash needs.

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