Things To Remember For First-Time Personal Loan Borrowers

Personal Loans provide instant access to funds to meet one’s emergency financial needs, making them extremely popular amongst all. In recent years, Personal Loan disbursement rates have increased exponentially. Non-banking financial companies (NBFCs) have made lending terms less stringent, while technological advancements have made the complete borrowing process easier and faster. After you submit the necessary Personal Loan paperwork, lenders disburse the loan in minutes, making it considerably easier for anyone to avail of funds. 

If you are considering taking out a Personal Loan for the first time, you should consider the below mentioned points. 

1. Choose the ideal money lender

Given the abundance of financial institutions and NBFCs offering attractive Personal Loan solutions, selecting the right lender needs extensive research and comparison. Usually, representatives of private lenders continue to call and text people, offering loans and other financial products and services like credit cards. It is critical not to fall for these phone calls and text messages. If you are serious about getting a Personal Loan, it is advisable to conduct thorough research and compare different options to make an informed decision.

2. Keep your documents ready

When applying for a Personal Loan, you are required to submit a few documents for verification. The Personal Loan documents required include Address proof, ID proof, income proof, bank statements, and others. Keep these documents handy as they will make the application process simpler and less stressful.

3. Calculate the interest rate

As a first-time loan applicant, you must calculate the interest rate on your loan to get the best deal. You can use the EMI Calculator offered by leading NBFCs like Poonawalla Fincorp for free to check your instalment before applying. Here, understanding two loan interest rate types becomes increasingly important:

• Personal Loan with a Fixed Interest Rate: The term “Fixed Interest Rate Personal Loan” refers to the fact that the interest rate will remain fixed and will not fluctuate throughout your loan tenure.
• Personal Loan with a Floating Interest Rate: Interest Rates may fluctuate during the loan term due to different lending rates.

4. Examine the fees

Personal Loans are subject to fees, such as processing and foreclosure fees, and so on. Look for these fees in the loan document or the lender’s website to ensure you don’t end up paying for them later.

5. Before applying, check your credit score

Before submitting your application to a lender, check your credit score to see where you stand. Each lender has its eligibility criteria and requires a specific credit score to be eligible for its products. For example, Poonawalla Fincorp accepts Personal Loan applications with a minimum credit score of 650. 

6. Think about your current liabilities

Before applying for a Personal Loan, you must consider your current debt. If you have already taken a loan or have credit card debt to pay off, calculate your debt-to-income ratio to see if you will be able to repay the loan without stressing your budget. If your debt-to-income ratio is less than 30 per cent, you can apply for a Personal Loan; if it is higher, consider other options. 

7. Before taking out the loan, make a repayment plan

Most lenders have their own EMI calculator, which allows you to check the loan repayment schedule before you borrow the money. You need to enter the loan amount, interest rate, and loan tenure, and the calculator will generate your EMIs.

8. Examine the foreclosure rules

Lenders typically charge foreclosure fees to recover any interest they plan to earn from the loan in case you wish to pay off your loan before the term is over.

Keeping these few key points in mind before applying for your first Personal Loan can go a long way toward ensuring a smooth borrowing and repayment experience. 

Personal Loan for central government employees

Employees of both state and central governments are eligible for Personal Loans. Personal Loans for central government employees have multiple uses including weddings, vacations, higher education, the purchase of consumer durable goods, debt consolidation, and others. 

Features include:

• Reasonable interest rates
• No collateral requirement
• The maximum loan amount is according to repayment capacity
• Repayment terms range from 12 to 60 months

Documents required for Personal Loan: 

• Identity proof
• Address proof
• Proof of employment
• Salary slips (for the last six months)
• Account statement (for last three months) 
• Signature verification

Conclusion

Considering these points before applying for a Personal Loan for the first time can ensure a smooth borrowing and repayment experience. From travelling, to hosting a wedding or funding higher education, you can use a Personal Loan for fulfilling your desires. Before applying for the loan, carefully compare the options in hand to choose the best tenure and EMIs for a seamless loan application process.