Are your friends suddenly up for a spontaneous trip? Do you plan on buying that latest smartphone? While the plans are full of excitement, one common problem that can stand in the way is your finances. You might have a steady job but might not have the required savings for the upcoming expenses. In such cases, there is no need to worry. Applying for a personal loan is always a good option that can be exercised when lacking funds.
However, before applying for a personal loan, you must ensure that you get a good deal. This will help in clearing the loan with ease. So, before speaking to a lender about getting a personal loan, make sure to go through the following tips:
1. Maintain a good credit score
Any financial institution will check the applicant’s credit score before approving a loan application, irrespective of the type of loan. This is why before applying for the loan, make sure to maintain a good credit score. You can do this by clearing all your bills on time without default. It is advisable to keep a credit score of 750 or more at all times. Note that lenders provide better deals to those with good credit scores, such as a lower personal loan interest rate.
2. Focus on your budget while applying for the loan
It is essential to clear the loan without facing any financial difficulty before applying for one. This can only be done if you know the loan’s EMIs beforehand. Use a personal loan EMI calculator to understand the loan’s EMIs based on the loan amount, repayment tenure, and the loan’s interest rate. If you are comfortable with the displayed EMIs, go ahead and apply for the loan. However, if it does not suit your budget, you can change the loan amount and tenure to get a fair result.
3. Choose a suitable repayment tenure
Generally, most financial institutions provide up to 5 years when it comes to a personal loan repayment tenure. You can either choose this tenure or clear the loan off sooner, whatever suits your budget best. Keep in mind that the interest is added to each monthly installment, and cutting down the tenure can help save on the loan’s interest.
4. Keep an eye on the additional charges
Many borrowers mistake thinking that the interest rate is the only expense they incur while applying for a loan. However, consider that lenders might also charge processing fees, administration fees, etc. To inquire about these charges before applying for the loan.
After going through the tips mentioned above, you are in a much better position to get a good deal on a personal loan. Also, before submitting your loan application, make sure to speak to the lender and inquire about their loan eligibility criteria. This will effectively reduce the chances of your loan application getting rejected.
