What should you know before taking Personal Loan?

Taking Personal Loans has become simple, and we can thank digitization for that However, the number of options available can confuse everybody. So, here’s a checklist that will help you choose the right Personal Loan. Some things you should consider before applying for a Personal Loan have been mentioned here. 

Loan Amount

You must know how much you need and for what purpose. Also, will you be able to repay the amount over time or not? The lesser the amount you borrow, the easier it is to repay. 

Also Read – 1 Lakh Personal Loan

Interest rate

The rate of interest imposed impacts your EMI and, eventually, your repayment ability. So, the higher the EMI amount, it will be harder to repay. So, do proper research and find your best interest rates before applying.

Repayment period

Repayment term refers to the period over which you make your EMI payments. So if the repayment of 5 Lakh Personal Loan terms is longer, the EMI amount will be shorter. 

EMI

EMI is essential in helping you decide on the best Personal Loan. It is the amount you repay to the lender every month. It also consists of a portion of the principal and interest amounts. When you avail of a loan, the loan needs to be repaid in full. So if you miss even a single EMI payment, it can have harsh consequences on your credit score. 

The simplicity of the Application Process

Most banks require applicants to provide several documents. The documents range from Identity Proofs to Income Tax Returns. But nowadays, people are done with the need for unnecessary documents. 

Must Read – 2 Lakh Personal Loan

Prepayment option

If you have suddenly come into much money and a loan is running simultaneously, it is best if you clear off all debts. But all lenders don’t provide the option to prepay or foreclose their loans. If they do, it will be after a certain number of EMIs have been paid, and also there will be a penalty charge.