The most preferred options for financial aid when it comes to meeting times of financial crunch are personal loans. Today, getting a personal loan is as easy as it can get. But at times, a personal loan may also mean a huge block of financial obligations if approached wrongly whilst getting one.
It is always better to exercise some caution and do some due diligence before signing on the dotted lines. Here are some of the common personal loans related pieces of advice for you:
- It’s not advisable to take more than one personal loan as it is a costly form of credit. You should depend on it only if you have no other options to raise money.
- Don’t get carried away and borrow more than what you can actually pay.
- Make sure you are updated on the terms and conditions before signing on as you will be obligated to fulfill the obligations as listed in the terms. If not, it may cause a rift between you and the financial institution you are lending from and may hamper your credit history too.
- Do not fall prey to the option of long tenure just because the financial service is offering it. The longer your loan tenure is, the higher will be your final repayable amount. Choose an EMI that can be managed comfortably each month. A higher EMI with a short tenure will prove to be more cost-effective than a lower EMI with a long tenure. However, make sure that it does not strain your monthly budget.
- Compare other loan options to personal loans. If you are an existing home loan borrower, it will be wise and pocket-friendly for you to opt for a top-up loan. There are also many other loan options out there such as loan against FD, gold loan, loan against security, etc.
- Before you decide on a lender, doing a bit of market survey on what other lenders have to offer will pay you off. Do a comparison of charges, prepayment clauses, and interest rates. Don’t make the mistake of rushing into it just because it’s sanctioned easily.
- Banks these days send executives to get you through the documentation process. Do not hand over blank, signed applications for the executive to fill up. Make sure you do it yourself and familiarize yourself with what’s being asked from you and what you will be offered.
- Read through the fine prints. Go by all the terms and conditions of the loan and be aware of the interest rate you are being charged, processing fees and other hidden charges. Learn about the loan pre closure clauses as well.
- Approach your regular banker as he will already be familiar with your credit worthiness. This will enable quick processing and easy disbursement of the loan. Negotiating interest charges will be easier too.
- It is very important that you maintain all the records of loan disbursed and payments made and the details of the negotiated interest, processing fees, waivers, etc. Banks may sometimes charge you fees for additional statements and agreement copies.