Applying for a Personal Loan for the first time? Don't worry!
When you face a cash crunch, you can rely on Personal Loans to meet your urgent financial needs. The loan can be used to fund almost any expenditure, be it medical bills, home renovation, unplanned vacations or children's higher education. No wonder their popularity has grown exponentially in recent years.
Moreover, getting a Personal Loan has become easier with new-age NBFCs like Clix Capital providing instant Personal Loans.
However, like all financial decisions, you must take caution while applying for personal loan. Else, you might end up burning your pockets with hefty charges and interests. Here's a first-time applicant’s checklist to help you make an informed borrowing decision.
Borrower's Checklist for First-Time Personal Loan Applicants
→ Estimate Your Requirements
While a Personal Loan rescues you from financial distress, it comes with interest and processing charges. So it's important to borrow only what you require to escape unwanted interest.
It wouldn't be wise to borrow the maximum amount just because you are eligible. Also, ensure that you can comfortably repay the amount borrowed without feeling burdened.
→ Identify a Suitable Loan Product
With the market inundated with multiple Personal Loan products, finding the best Personal Loan in India can be challenging. Know your priorities and be aware of the loan products that best suit you.
Don’t get carried away by misleading advertisements and research several loan options before finalising one product. Understand their eligibility criteria, terms and conditions, and charges associated with their product before zeroing in.
→ Have the Documents Ready
Making sure to collect all necessary documents on standby is the key to getting instant loan approval. Leading NBFCs like Clix Capital have minimal documentation requirements, making it easier to access instant loans online.
Here are the basic documents you must keep handy to apply for a Personal Loan online.
- Basic KYC documents (Aadhar Card, PAN Card, Government ID)
- Passport Size photograph
- Income Proof (Latest Salary slips or current year's Form 16)
- Last six month's bank account statement
→ Consider the Interest Rate
Interest refers to the cost you pay for borrowing money. The higher the interest, the higher your EMI and the larger the repayment amount. Hence, one must carefully consider interest rates as they could affect your affordability.
Personal loan interest rates vary depending on your credit score, income, and other factors. If you want to be offered the best rate of interest on Personal Loans, you must keep the following things in mind:
- Maintain a healthy credit score
- Regularly repay loans and credit card bills
- Keep your credit utilisation ratio below 30%
- Try to maintain a debt-to-income ratio between 20 to 35%
- Only borrow what you can repay
→ Calculate Your EMI
All borrowers must repay the Personal Loan taken by paying Equated Monthly Installments, popularly known as EMIs. Calculating your EMIs in advance will give you a fair idea of your monthly expenses going towards loan repayment. This way you can make an informed decision regarding the loan amount depending on your affordability.
Make use of a personal loan EMI calculator to try out different combinations of loan amounts, interest rates, and tenures to find the most suitable one. Make sure that the EMI you settle for puts you in a comfortable position and does not strain your pocket.
→ Keep a Tab on Your Credit Score
Your credit score indicates how you have managed your finances in the past. NBFCs use it to gauge your creditworthiness and assess the risk associated with sanctioning a loan to you.
Credit score holds significance in Personal Loans as they are unsecured loans. So it goes without saying that a bad score can impede your chances of getting an instant Personal Loan.
Not just the eligibility, your credit score also dictates the interest rates and other terms associated with the loan.
So before you apply for a Personal Loan, check your credit score to ensure they match the loan provider’s expectations. If it's not up to the mark, take steps to improve the score first. That way, you can bargain for better terms and conditions on your loan.
→ Find Out the Processing Charges
Like all other loans, Personal Loans also come with processing fees charged for clearing your loan application. Depending on the amount, the fees will change.
Apart from processing fees, other charges such as documentation charges and legal charges may also form part of your application procedure. One must factor in all these additional costs while deciding on a loan amount.
→ Look Out for Foreclosure Rules
Foreclosure means repaying a loan before the end of the tenure, thereby saving your interest cost. This can be done at a time when you might have sufficient funds to pre-close your loan. While some Personal Loans allow foreclosing your loan, others charge a fee for the same.
It's better to be aware of the minimum lock-in period and foreclosure charges beforehand so you can plan your repayment accordingly. For example, if foreclosing your loan proves costlier than keeping the original tenure, you might want to stick to the original schedule.
The Best Personal Loan In India
Contemporary NBFCs are your ideal choice if you're looking for quick and affordable Personal Loans in India. They have one of the easiest Personal Loan eligibility criteria, making funds accessible for many.
For instance, if you are a citizen of India earning Rs 20,000 per month with an Experian score of 630, you are eligible for a loan up to Rs 10 lakhs at Clix Capital. Other reasons that encourage you to apply for a Personal Loan online are:
- Instant approval and disbursal within minutes
- Hassle-free loan processing
- No restriction regarding the end use of funds
- Minimal documentation requirement
- Availability of customised repayment options
- No need for any collateral, security, or guarantor
Conclusion
Personal Loans are excellent options to meet financial needs. Make sure to assess the loan product and select the one that fits your needs. With new-age NBFCs entering the picture, getting a Personal Loan has become quite simple. Check out the Personal Loan eligibility, loan amount, EMIs, interest and repayment schedule before applying for a loan.
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