Are You a Smart Personal Loan Borrower?

Updated on: 19 Jan 2024 // 4 min read // Personal Loans
Author :(466 posts)

In order to maintain your lifestyle, you must pay close attention to your personal finances. You need to make sure that you are not living out of your means and are instead you should try to save a considerable amount of money every month towards your retirement fund. One of the vital aspects of ensuring a secured future is investing in various investment options to build up your savings such as fixed deposit, mutual funds, pension funds, equity shares,and so on. These savings come handy when you are facing a financial crisis. But certain times your requirements are much more than your savings,and in such a situation your options are very limited. One of the best options that you have at your disposal is to Apply for an HDFC Personal Loan or you could consider other Personal Loans.

About Personal Loans

Theseare one of the most popular loan product offered by various financial institutions in India for their customers. Personal Loans are an unsecured loan product, which does not require any security to be hypothecated with the lender. You are free to use the Personal Loan amount for any requirement that you may have such as paying bills, going for a vacation, further education, home renovation, and so on.

You don’t need to inform the lender about the final use of the money. The repayment tenure of a Personal Loan can extend up to 60 months,and the amount available can go up to Rs. 50 Lakhs also. Personal Loans are usually available to salaried employees,and the loan amount depends on your repayment capacity. The Rate of Interest on Personal Loans in India starts at 10.99% and can go up to 20%, depending on the lender.

In order to avail a Personal Loan, you first need to understand the different Types of Personal Loans and then apply online with the lender of your choice. You can also choose to apply from various online loan marketplaces, where you can access information about different types of Personal Loans and can apply for a loan product online, that you find most suitable for your requirements. You just need to fill an online application form with some necessary information, upload essential documents and if your profile meets their eligibility criterion, then the loan amount shall be credited to your account within a few hours.

Are You a Smart Borrower?

In order to maximise the benefits that you can avail from a Personal Loan, it is essential that you act smartly. By actingsmartly, it is meant that you do not rush into a decision and exercise due diligence before committing yourself to such a significant financial commitment. Here are some tips that you must follow in order to become a smart borrower:

1. Build your credit score

In the present times, technology has made the whole process of loan processing transparent. One of the most important factors that must be paid attention to is your credit score. You must ensure that your credit score is 750 or above, in order to increase the chances of your application being approved and get the best interest rates. Therefore, you must keep a close eye on your credit score, and if it falls below the specified threshold, you must work towards improving it.

2. Understand your requirements

Never file an Application for a Personal Loan haphazardly. You need to remember that it is a borrowing that must be repaid along with interest. So, you must borrow only the amount which you require and which you can afford to repay with your monthly income. There is no use of using loan amount to make investments, as the rate of interest is going to be much higher than the rate of returns. Sit down and with a calm head assess your exact requirements, even if you are eligible for a higher amount, you must borrow only that much amount which you require.

3. Check multiple offers

You should never accept the first offer that you get, as it necessarily need not be the best offer that you are going to get. Financial services market is highly competitive, and multiple lenders will be willing to offer you their Personal Loans at Lower Interest Rates or certain freebies such as a Credit Card. So, always conduct thorough research and take a decision only after satisfying yourself about the interest rates.

4. Calculate the APR

APR, i.e., the Annual Percentage Rate is the total cost of a loan that you would have to incur during a year,and it gives a better indication regarding the cost of the loan as compared to interest rates. APR includes various charges such as processing charge, interest rate, and so on. So, your final decision should be based on APR and not the interest rate.

5. Read the loan agreement

Before signing the agreement, you must read through each and every clause of the loan agreement. If you find any clause that you do not understand, or feel is detrimental to you, then point it out to the lender and seek clarification regarding the same. Sign it only after you are thoroughly satisfied.

It is essential that you exercise due diligence and caution before committing yourself to a Personal Loan. This would help you be safe from a lot of hassles later on.

Also Read: What Makes a Personal Loan So Popular?

To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 60+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.