7 important factors you should know before taking a personal loan

Personal loans are undoubtedly the least expensive alternative option to that of credit cards since they assist you in covering huge expenses such as vacation, purchasing a property or vehicle, etc. Apart from that, a personal loan saves a considerable amount of interest.

What are the eligibility requirements while applying for a personal loan?

Money view which is currently one of the leading financial institutions features a personal loan eligibility calculator on their official website. Personal loan eligibility differs from one individual to another. Some of the crucial criteria include financial capacity and volume of monthly income. Apart from that, there are other factors taken into consideration such as age, credit score of an individual, years of experience in a relevant industry.

Possess relevant documents

Once you have performed research and comparison, applicants would proceed further with the personal loan application process. It is always better to apply for a personal loan online rather than visiting the branch directly. After sharing personal information, applicants are prompted to furnish relevant documents to prove age, identity, and address.

For example, Form 16 along with pay slips are to be submitted before the panel in the case of salaried professionals. In addition, they are required to submit bank statements for the last six months. Profit and Loss Statements along with IT returns are to be submitted in the case of self-employed individuals.

Gained popularity

For the past many years, the disbursement of personal loans has increased at an alarming rate. Now several Non-banking financial institutions and banks offer funds with flexible repayment tenure, relaxation in lending terms, etc. They are implementing technology to execute the process seamlessly. However, the applicants must set a clear repayment plan in their minds.

So there are few things to be kept in mind before taking a personal loan: —

• The volume of funds required: —

The initial step involves total funds required while availing a personal loan from credible financial institutions like Money view. If you are planning to borrow a small amount, then it will be easier to pay off the personal loan quickly.

• Evaluate the rate of interest: —

The interest rate would have a greater impact on the EMI’s and the duration of the repayment period. Nowadays, numerous lenders offer a diverse range of interest rates on personal loans. Be prudent by performing comprehensive research to choose the best interest rate. Choose a short repayment term as far as possible.

• Repayment period: —

Applicants are supposed to repay the loan amount in EMI’s within a period of thirty days. Today, the majority of the lenders like Money view offer flexible repayment tenure i.e. six months to seven years. The duration of the loan amount is based upon the rate of interest and monthly payments.

• Affordability: — -

Applicants do have the opportunity to pick a suitable repayment loan based on their monthly income while applying for a personal loan. Quite a few people prefer to cover the EMI slowly i.e. it might take years or months. On the other hand, some pay off their loan amount at a rapid pace, as a result, they pick the highest monthly payment.

• Check whether any additional charges are levied: —

Personal loans often come with a processing fee, however, prominent financial institutions like Money view do not charge extra charges while availing of a personal loan. However, there is a minimum flat fee to be paid.

• Do not approach multiple lenders at a time: —

It is advisable to avoid spending time visiting too many lenders, as you might be viewed as a desperate individual to seek credit and it would affect the credit rating. Therefore, he/she may go through a loan aggregator portal rather than compromising on credit score.

• Ensure you have a good credit score: — -

It is essential to get familiar with your credit score before applying for a personal loan. This is crucial as to whether an applicant is qualified to avail of a personal loan. Today, most of the lenders are searching for individuals with a good credit score, especially online banks. The chances of fetching an attractive deal are high if you have a fair relationship with the concerned bank and a decent track record of paying bills within a stipulated period.

In addition to the above-mentioned, there is another option available in the form of a balance transfer card. A major highlight regarding this particular card is that it would enable an applicant to pay zero interest for a period of about twenty months thereby saving a considerable amount of money.

Based on the present situation of an individual, he/she will be able to transfer multiple credit card balances to a new card unless it does not exceed the threshold.

The credibility of financial institutions

For the past many years, there were numerous offline banks wherein one could avail a personal loan without worry. At present, the presence of credible and trustworthy financial institutions like Money view allows you to carry out the process in a hassle-free manner. You are supposed to carry out a comprehensive check regarding the credibility of a particular financial institution before approaching them.

Effect of personal loan on the credit score of an individual

A personal loan is a type of installment credit while a credit card is regarded as revolving credit. It is essential to include these two types of credit to boost up the credit mix. To maintain a decent credit score, you should lay special emphasis on the utilization of credit and timely payments of the personal loan without any default.

An installment loan is not subject to an increase in credit score whereas utilizing a personal loan to clear revolving debt would enhance the credit score.

Conclusion:

Personal loans are indeed one of the best options especially if you hold a budget plan. It is highly essential to carry out a detailed background check regarding a bank or similar financial institution. This will help ensure a smooth loan process without hampering the credit score.