Planning to raise a personal loan this festive season? 7 key points to remember

Smart borrowing during festive season

Check your credit score

Your credit score is the first thing that lenders take into account when they sanction a personal loan. A good credit score increases your chances of getting sanctioned quickly and helps you get a better interest rate. Make sure you check your score beforehand and resolve any issues like late payments or credit report errors.

Assess your repayment capability

Borrowing more than you can repay comfortably with ease is not a good thought. Do not finalize your monthly salary, existing EMIs, and other financial commitments before taking the loan amount. A personal loan should be affordable so that EMIs do not strangle your money during festival seasons or in the future.

Compare interest rates

Interest charges could also vary significantly between banks and NBFCs. A mere 1-2% variation could also make a big difference to your overall repayment. Take your time to compare the rate, processing charges, and prepayment penalties of multiple lenders to find the most suitable deal.

Know the fees

Processing fees, prepayment fees, late payment penalties, and other hidden costs can add up quickly. Read the contract fine print and clarify with questions before clearing all the doubts with the lender. Having all possible fees in the know keeps you safe from future surprises.

Choose the right loan tenure

The tenure affects your EMIs as well as the interest paid. The lower the tenure, the higher the EMIs and lesser the interest total; and the greater the tenure, the lower the EMIs but more interest paid. Opt for a tenure that balances your affordability with saving.

Keep documents handy

Personal loans require documents like identity proof, proof of address, income statement, and bank statements. Having these documents in hand can speed up the approval process and prevent your festival planning from getting delayed.

Multiple applications

Having multiple applications from multiple lenders at a single instance can harm your credit score. Limit the applications to one or two lenders after careful comparison for a better chance of getting approval and for maintaining sound health of your credit.

FAQs

1. Is prepaying my personal loan feasible during festival season?
Yes, prepayment is generally acceptable by lenders, but check your loan agreement for any penalty prior to prepayment.

2. Is it possible to take a personal loan for shopping during festivals?
Yes, as long as you borrow sensibly and the EMIs are affordable.

3. At what hour can a personal loan be disbursed?
If your papers are in order and your credit track record is clean, some of the lenders can transfer the loan between 24 to 48 hours.