Things to Keep in Mind When You Are Applying For a Personal Loan for the First Time!

In this fast-moving world, where everything and everyone is dependent on financial resources to fulfill and meet their needs, it becomes quite challenging for many at the same time to keep up due to a lack of necessary finances. This can cause some people to sacrifice many things. That is where the role of personal loans comes to play.

What is a personal loan?

A personal loan is an offering that will help you meet your immediate requirements, like wedding, education, travel, medical emergencies, etc. The most striking characteristic of personal loans is that one does not require any pledge of security or collateral, hence, they are also termed as signature loans or unsecured loans. Personal loans can be used for the cheapest of purchases to the most expensive ones. This tends to attract a lot of people’s attention and they opt for a huge lump sum as a personal loan, but it is always advised to borrow only as much as required.

Important tips for first time loan borrowers

If you are a first-time borrower, there are few pointers you need to keep in mind before and while you apply for a personal loan:

  1. Personal loan eligibility: Before applying for a loan, you must check your eligibility to avail that loan. This can be done by checking your credit score. The minimum CIBIL score should be in the range of 720-750, which will make you creditworthy and will make the lenders approve your application for a personal loan. The minimum amount required to apply for a loan for a salaried individual is Rs 20,000 – Rs 25000.
  2. Choose loans with the lowest interest rates: Personal loan interest rates usually range from 11% to 20%. Lower loan payment will prove to be quite beneficial in the long run.
  3. Financial Know-how: Even though personal loan application is hassle-free, it is advised that the loan applicant must be aware of the basic financial terms such as loan agreement, interest loan, repayment, and loan tenure, so that it will give you a better understanding of your loan’s terms and conditions.
  4. Comparison Check: It is always good to keep a comparison of the various personal loans offered by different banks. This will help you choose the best option that fits your requirements.
  5. Ability to repay: To avoid any defaults in the future, you must always compute your loan EMI payment.

When to opt for personal loans?

You might need to avail a personal loan when:

  1. The credit limits on your credit card do not meet the current needs
  2. You have no collateral
  3. Your least expensive option at present is a personal loan

How to calculate your loan?

Instant personal loan EMI can be easily calculated with the help of a personal loan EMI calculator that is available on various bank portals wherein you just have to enter the loan amount, rate of interest, and loan tenure.

In conclusion, if you require money urgently and are not in a position to produce any collateral at the same time, then personal loans are the best option for you. Ensure to keep in mind the tips mentioned above for a smooth application and repayment of this loan.

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