/A personal loan is one of the best ways to fuel a destabilised cash flow, especially in times of an emergency. Borrowing money from friends and family may not incur interest, but it comes with strings attached. Whether it is a health emergency, a pending fee for higher education or an urgent travel requirement, a personal loan can be of great help.
With the advancement of technology, applying for personal loans is becoming easier. Now, you don’t have to wait in long queues for bank officials to answer to your requests. You can simply log on to a website or open an app on your phone from the comfort of your home to get the process started. You can get some fantastic pre-approved offers and even disbursal within minutes of approval if you’re lucky. So, in case of a cash crunch, an instant personal loan can become your saviour. But before you apply for an instant personal loan online, there are a few things you should know.
7 Things to Know Before Applying For An Instant Personal Loan Online:
- Arriving at a Loan Amount: Always remember only to borrow the amount which is needed. It is valid for all loans, but mostly personal loans because of its high-interest rate. Make a list of all your needs and decide which of them need to be fueled by a personal loan. If the money is sitting in your account, you will be paying interest more than you will be making on interest. So, to protect yourself from unnecessary losses, it’s best to only apply for a personal loan amount you require and comfortably repay.
- Eligibility and Credit Score: A instant personal loan is quick in disbursal and processing, provided you meet all the eligibility requirements. The lender will verify your residential stability as well as your employment stability to assess their liability. If you are a self-employed individual, you will have to show proof of a steady income and regular tax returns. But the most crucial personal loan eligibility factor is your credit score. The credit bureau decides your credit score or your CIBIL score by analysing your credit history. If you have been making timely and regular payments on your past loans as well as your credit cards, your credit score will be high. A high credit score allows you to choose a high loan amount as well as a low interest rate.
- Tenure: Lenders offer a varying tenure for personal loans. Mostly, you can choose between a tender of 12 months to 60 months. A shorter personal loan will make you pay a more considerable amount as EMIs. But a longer tenure will accrue more interest. So, it’s always better to cut your monthly expenses a little and choose a shorter term. If you are looking to build credit, longer tenure is the way to go. You can check your EMIs and decide which tenure is most comfortable for you.
- EMI: Your monthly EMIs should be paid regularly and timely. Missing a single payment will show on your credit profile and bring down your credit score by a lot. It can potentially harm your chances of taking a loan in future. So, it would be best if you decided on an EMI which you can pay comfortably. Check your monthly payments with a personal loan EMI calculator and determine what combination of tenure, EMI and interest rate is best suitable to you.
- Interest Rate: Interest rates also vary with different lenders. While some lenders may offer you a fixed interest rate, some provide the option for a floating one. The rate is also subject to your eligibility and CIBIL score. So, choose a lender who offers you the best interest rates.
- Processing Time: Any loan takes its own processing time. You may require a personal loan for an emergency, but the processing time of a personal loan by a particular lender may not allow you to pick that lender. So, always apply earlier than your deadline or choose a lender who offers you quick processing. For example, personal loans by Fullerton India gets disbursed within 30 minutes of loan approval (after successful verification of all documents).
- Prepayment: You might take a personal loan for a temporary shortage of funds. But if you come across some money during your loan tenure, consider prepaying your loan. Prepayment saves you in interests as well as shortens the term of your personal loan. However, always check if your lender offers you a prepayment option and if they have a prepayment fee.
Multiple lenders offer various personal loan schemes so that you can borrow according to your needs and within your comfort. An instant personal loan is great but has a high interest rate. You can choose other options such as a top-up on your home loan, loan against property or a gold loan if you have the eligibility.