Whenever it comes to taking any decision in our life, we must take it only when we are not at all doubtful about it. Our financial decisions are also no different. Financial decisions especially the borrowing decisions must be taken only after a lot of brainstorming.
One of the most availed financial product of India is personal loans. Because of the easy availability and fast processing, many of the borrowers apply for the same without much research on it. Taking such hasty decisions may make you face shocks and surprises in days to come. To avoid any of those unwanted circumstances, one has to know each and every aspect of the product prior to availing it.
To know your personal loan in a better way, here we have bought a very simple and useful procedure. Here you are to find answers to 7 questions that are given below. Once you find all the answers, you will realize whether this borrowing decision is right or not.
So Here Come 7 Questions to Ask Before You Apply for Personal Loan
Is the Purpose of the Loan is Worth?
Personal loans are multipurpose loans. Because of this feature, a borrower can take a personal loan for any kind of use. The loan provider never asks a question on the usage of the loan. The use of the loan amount is not a concern of the lender but it should be of the borrower. Prior to applying for the loan, think twice if the purpose of the loan is worth taking a loan or not. A loan should be taken only if it is a necessity.
Are You Eligible for the Loan?
The approval on your loan application is a matter of being eligible for the loan. The loan eligibility of an individual is measured by a number of parameters such as age, income, FOIR etc. Before you apply for the loan, you are to be assured of your eligibility. The loan eligibility may differ from lender to lender which can be extracted from the website of the lender. A loan should be applied only if you are eligible for it.
How Much of Loan is Needed?
The maximum loan amount of a personal loan depends on the repayment capacity of the borrower. Sometimes there may be a difference between the loan eligibility and the amount needed. Many a time borrowers are found to be applying for an amount which is not sufficient or some other times more than they need. Well, in both the scenarios the borrower can be at a fix. To avoid such situations, it is better to find out the exact amount that is needed and apply for the loan accordingly.
What is the Interest Rate?
Never to forget the fact that interest rate on a personal loan is higher than secured loans. Moreover, the interest rate on personal loans can differ from lender to lender. So before availing the loan, be assured of the interest rate you need to pay in order to avail the loan.
What is the Maximum and Minimum Tenure?
The tenure of the loan is the prime factor that decides EMI amount as well the loan cost of borrowing. A shorter tenure will make your EMI amount bigger and vice versa. At the same time, the loan cost keeps on increasing with a longer tenure. So the maximum and the minimum loan tenure is something we must know of a loan so that the best tenure can be chosen.
How Much You are Paying in Total?
This is the next important question you are to ask before you avail any kind of credit. Most of the times, lenders insist the borrowers opt for a longer tenure saying that the EMI amount will be smaller so that the loan repayment will not become a burden to you. This is a fact which is undeniable but if you flip the coin you will find that while trying to keep the EMI amount smaller, you are actually paying much more than what you have borrowed. It happens because the interest on any kind of loan is calculated in a compounded way hence a longer tenure increases the total amount payable. One can use online calculators to find the total payable with just a few clicks.
Is Your Lender a Trustworthy One?
The present credit market is stuffed with a great number of lenders. One has to choose the one among the many. In order to find the best lender, one has to do research on lenders so that the best lender according to one’s need can be found. Choosing a wrong lender can make the repayment period a difficult one. One can do online research on lenders by checking ratings and reviews given by the customer of the lender. So before you apply for the loan, make sure that the lender is a trustworthy one.
To Sum Up
Taking a personal loan is a personal decision and there are times when a personal loan can be much more helpful than anything else. A personal loan can be used best when you are aware of the terms and conditions of the loan. So it is advised to make informed decisions so that you don’t need to regret your lending decisions on times to come.