Today, it is not common to get relevant information about personal loans or instant loans. Many banks provide you with personal loans when you come in need of urgent funds. But it is suggested to the borrower not to take a personal loan from any bank without research. If you want to borrow personal loans to meet your instant needs, then there are the important things you need to know to avail of personal loans.
Reduce balance interest rate or flat interest rate.
Do not only fall for the lowest interest rates. It would be best if you read whether the personal loan is provided at a flat interest rate. Flat-interest-type personal loans are provided at a lower interest rate. It does not mean that you need to pay less.
Assess the all-in cost.
Personal loan Interest cost is not the only cost that you must bear. There are other charges too. Consider the following costs.
1. Processing fees
Usually, the banks possess charges up to 1-2% of the amount of the loan as processing fees. Some banks charge flat processing fees. Such charges are added to the total cost of a personal loan. The lower the processing fees, the better you take personal loans.
2. Prepayment fees
You can avail the personal loans to meet the short cash flow crunch. In case, the prepayment of a personal loan is a possibility where the cash flows improve. By prepaying the personal loans, you save the absolute interest cost.
If you fall in any category, you should consider the prepayment penalty while trying to assess the cost. Banks use the prepayment penalty tool to make sure that the borrowers stay on loan and apply the interest cost. The lower the penalty is prepayment, the better the personal loan.
3. Late payment fees
Lenders should possess a penalty if they make the EMI payment late. If you are struggling with cash flows, you have to consider this penalty also.
Consider the needs, not eligibility, while availing
If you require the 3 lacs to fulfil your short-term need, you should borrow only 3 lacs. Sometimes, the banks may convince you to avail of more than 3lacs because you are qualified. You should get emails and cold calls from lenders or banks for the same.
A personal loan is a form of expensive debt. Why do you want to pay interest for money that you do not need? It is suggested to borrow as much as you require, not more.
Shop for good rates
It is suggested to shop for the best rate to avail of personal loans. Never actually apply to check the best rates. It will result in tough inquiries on the CIBIL score and may affect the credit score. You check the prevailing rate on personal loans by calling customer care.
Never take a personal loan till you come under an emergency. It is suggested to read all terms and conditions of a personal loan before availing it.