Personal loans are among the simplest ways to get funds for various goals. These are unsecured loans, which means you don’t have to pledge your assets as collateral to get the required funding.
Top lenders have easy and straightforward eligibility criteria, so you can easily qualify for a loan and finance your wedding, education, medical treatment, holiday, or attain any other financial goals.
Important factors to know about a personal loan
Like any other credit instrument, it is important to understand the features of a personal loan. This is key to making the right decision for your financial well-being today and in the future.
● Interest rate
The personal loan interest rate influences your total borrowing cost. This rate varies for each lender. Factors that affect your interest rate include the loan amount, tenor, your financial profile, and more. If your credit profile indicates lower risk, you may be offered a lower interest rate by your lender, and vice versa.
● EMI repayments
You repay your personal loan in Equated Monthly Instalments (EMIs). These EMIs are spread across every month of the loan tenor in equal amounts to make repayment easy for you. It is important to ensure that your EMIs are affordable to protect your finances and credit score. To make an informed decision, use a personal loan EMI calculator. This online tool gives you accurate estimates of your EMIs based on the tenor, amount and interest rate.
● Tenor
The tenor is the period for which you borrow the money from the lender. Today, lenders offer flexible durations ranging from days and months to years. While deciding on the tenor, consider its impact on your EMI to make the right decision. Generally, a lengthy tenor means reduced EMIs, but higher borrowing cost. A shorter tenor means increased EMIs but lower borrowing cost, so choose wisely!
● Eligibility criteria & documentation
The eligibility criteria and documentation requirements are different for every lender. Personal loan eligibility criteria generally include your age, employment status, monthly income, area of residence, and credit score. When you meet all the criteria, your chances of approval are increased.
For documentation, the lender may ask you to provide proof of identification, address, employment, income, and more. You can check the eligibility criteria and documentation required on the lender’s app or website to ensure that your application process is seamless.
● Fees & charges
In addition to the interest charged on your loan amount, there are also additional fees and charges that need to be considered. Lenders generally levy a processing fee, which is a certain percentage of your loan amount. They also charge late payment penalty and prepayment or foreclosure charges, which refers to making a part or full repayment before the due date. Knowing these costs beforehand, helps you plan and prepare for repayment better.
Arming yourself with this information helps you better understand a personal loan and use it well. A personal loan can come in handy in many different situations, so long as you borrow wisely. To do that, you must maintain a healthy financial profile and be smart about the loan offers you consider.
One way to get the best deal is to use the Bajaj Markets App, a digital platform that offers a wide range of lifestyle and financial products – all under one roof. Download the app on Google Play or App Store to get the most affordable personal loan deals in a single click!
