A personal loan is a common and popular form of financing, due to the range of benefits that it provides. Borrowers who avail personal loans usually utilize the funds for making purchases, consolidating multiple debts, or managing large unforeseen expenditures.
The option of taking a personal loan is becoming more and more popular, especially among the middle-class population, because it is a saviour during times of financial hardship. Click here to know more about affordable personal loans by Upwards.
An instant personal loan not only gets approved immediately, but is also disbursed quickly. It is an unsecured loan against which you will not have to promise any collateral (assets such as gold, property, etc.) to the lender.
Here are a few questions you should certainly ask yourself before applying for a personal loan.
- Why do I need a personal loan?
While applying for a personal loan, the first point of consideration should always for what purpose you want to take the loan.
It is important to be sure about the purpose for which you wish to utilize a personal loan. Generally, the reason for you to take a personal loan does not have a significant impact on your loan application, but some lenders such as banks may put restrictions on the purposes for which you are taking the loan.
- What amount of an instant personal loan should I apply for?
Calculate all the expenses that you wish to cover using a personal loan and set your loan balance accordingly.
Ensure that you apply for only the amount of cash that you need, because if you exceed the amount more than your requirements, then the loan can get more expensive for you and consequently, you may end up defaulting on your loan repayments.
With Upwards, you can easily get an instant personal loan for Rs 20,000 up to Rs. 2,00,000. You can select a longer repayment tenure for your Upwards loan, up to 3 years, to make your monthly EMI low and affordable.
- Do I need to improve my credit score?
You should always check your credit score (CIBIL score) before applying for a personal loan. A good credit score means that you can easily convince the creditor that you are capable of repaying the loan. As a result, there is an increased chance that the creditor will offer you a personal loan with the best rate of interest.
The credit score ranges from 300 to 900. To avail great benefits on your loan and credits, your credit score should be 750 or above.
- Which kind of personal loan suits me the best?
An unsecured personal loan is one of the most popular types of loans, but lenders also offer various other personal loans that have their own benefits.
- Unsecured personal loan: As mentioned, this type of loan requires no collateral to avail, which is why they have slightly higher interest rates than those of other loans. However, unsecured loans have a much faster approval and disbursal process.
- Secured personal loans: In this type of loan, you need to pledge your personal collateral as security to the The advantage of secured personal loans is that they have lower interest rates; however, it is a hassle to arrange for the required collateral amount to pledge against your loan. Additionally, if you cannot repay your loan, the lender will have the right to seize your collateral and take ownership of the same.
- Fixed-rate loans:The interest rate remains unchanged throughout the entire termof the loan, which keeps your monthly EMI amount stable.
- Mutable-rate loans:These loans initially have lower rates of interest. However, the lender can choose to increase them later.
- What are all the other fees for personal loans?
Personal loans come with minor fees. This includes a nominal processing fee (2-5% of the loan amount), prepayment and foreclosure fees (if you want to make an early payment or pay off the loan before the end of repayment tenure).
These fees will vary from lender to lender, but it’s a good idea to read through the terms and conditions that will mentioned such fees.
Make sure to ask yourself the above-mentioned questions before applying for a personal loan, so that you make an informed choice that proves to be beneficial in the long run.