It is important to have all pertinent information before applying for a personal loan. It improves the chances of your loan being approved but can also help you secure a lower interest rate on a personal loan. Here are some vital things you need to keep in mind before applying for a personal loan.
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Maintain a good credit history
A credit score or the CIBIL score represents your credit worthiness based on your history of credit repayment. The CIBIL score ranges from 300-900, and a score above 685 or higher is considered ideal. A lower credit score may result in your loan application being rejected.
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Compare the interest rates in the market
Comparing the interest rates offered by various lenders ensures that you get the lowest rate. You can easily compare the rates offered by different financial instituions on platforms such as Paisabazaar, BankBazaar, and MyLoanCare.
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Assess all costs
There can be numerous costs like processing, prepayment, and late payment fees when borrowing a loan. Before applying for a loan, consider the various fees your lender charges to get a clear estimate of the expenditure.
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Consider your needs to choose the right loan amount
Make a list of all your needs and requirements, and then priortise which of the needs you are going to finance with a loan. Some everyday purposes for taking a personal loan are buying a vehicle, financing a wedding, addressing a medical emergency, or planning a holiday.
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Evaluate your ability to repay the loan
Before borrowing a loan, prepare for its repayment. You can do this by routing income from investments towards EMI payments. But you should also ensure that your income is enough to repay the loan.
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Avoid falling for gimmicky offers and plans
There are lenders across the market that offer artificially low-interest rates or gimmicky schemes. When you check the fine print, these loans often turn out to be more expensive than expected.
