Not repaying your loan on time can not only hurt your financial health but also affect your credit score
Owing to the integration of technology with finance, the process of availing a personal loan has become quick and easy. Unlike earlier, you can now apply for a personal loan online, which hastens the disbursal process and makes this loan an ideal financial solution for emergencies.
Further, there is no usage restriction on this collateral-free loan. With personal loans interest rates being competitive today, this kind of financing is one of the best tools to manage your financial goals.
Before you check out the best personal loans and go about the application process, here are some tips to help you have a stress-free borrowing experience.
Borrow only what you can repay
The secret to repaying your loan on time is to apply only for a sanction that you can afford to pay back without restricting your monthly budget. This will make repayment a breeze and help you steer clear of penal interest or charges.
In this regard, remember that EMIs shouldn’t exceed 15% of your in-hand income in case of a single loan, and 40% in case of multiple loans. This threshold ensures that you can still pay for other expenses with ease. To ascertain the affordability of your EMIs, use an online personal loan EMI calculator, an easy-to-use tool that can help you ascertain your loan instalments. If need be, adjust the amount you wish to borrow based on the calculator’s results.
Get insurance for high-value loans
Not repaying your loan on time can not only hurt your financial health but also affect your credit score and affect your ability to avail loans in the future. While you should have a sound repayment plan in place, it is important to go the extra mile by getting insurance coverage for high-value loans.
By doing this, you will be able to protect your family and finances if you meet with an unfortunate incident. Such insurance policies repay your loan in case you pass away, meet with an accident, lose your job, or suffer a disability and lose your income, thus providing financial protection when it is most needed.
Avoid applying for multiple loans together
In a hurry to get a personal loan on time, you may consider applying to various lenders simultaneously. While this may not seem problematic, it can harm your credit score and lead to rejection.
This is because for every loan application that you submit, lenders raise an enquiry with a credit bureau. These are hard enquires that show up on your credit report. On seeing multiple applications, lenders assume that you are credit hungry and cannot manage your finances well. This may prompt them to reject your loan or grant you one on unfavourable terms.
Read the loan agreement thoroughly before signing
The loan document contains the terms and conditions of the lender, charges, consequences of default, and other such important details. By signing the document, you agree to all the clauses of the loan, and if you fail to abide by them in the future, you may find yourself in legal trouble. So, read this document carefully before signing it. If you need to, seek legal help to make sure that you understand the technicalities.
Compare lenders and their offerings to get the best deal
Researching lenders and evaluating personal loans online can help you make the right borrowing decision. Look at interest rates, disbursal times, part-prepayment and foreclosure fees and other features to decide who is offering you a better deal.
For instance, Bajaj Finserv offers high-value personal loans of up to Rs.25 lakh at attractive interest rates as well as a convenient Flexi facility. This allows you to make multiple withdrawals from your assigned amount and pay interest only on the utilised amount.
What’s more, you also have the option to pay interest-only EMIs thereby allowing you to save up to 45% on EMIs. This loan is also offered with a basic eligibility criteria and minimal document requirements, and you can apply for it online in just a few clicks.
Further, you can also check your pre-approved personal loan offer to view customised deals by submitting your name and contact number. Applying for personal loans online via this offer lets you enjoy hassle-free, one-step approval.
The article is a consumer awareness initiative by Bajaj Finserv Ltd.Subscribe to Moneycontrol Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get Moneycontrol PRO for 1 year at price of 3 months at 289. Use code FREEDOM.