After a long stint of slowdown for over 2 years, the Indian economy is slowly crawling back to its regular pace of growth. It has also persuaded the growth of the financial market through increasing demands for funding options to meet big-ticket financing goals. Among all secured and unsecured funding options available for borrowing, individuals have for long preferred a personal loan as their go-to financing option. Thus, the economic recovery of India as well as of its financial market also saw personal loan as one of the first financing options to regain high demand.
To meet this growing demand and amidst an increasing competition, financial institutions are offering several favourable terms on the advance to benefit the borrower. When availing the advance for personal financing purposes, it is important to know a few essential details about it, which a curated checklist can help with.
Your Personal Loan Checklist to Follow When Borrowing
1. Know all eligibility requirements laid down by lenders
The personal loan eligibility requirements can differ from one financial institution to another. However, some criteria are essential to fulfil, and thus remain common across financial institutions. Before applying for your loan, you must be well aware of these requirements that you may be asked to meet.
These advances are available for both salaried and self-employed individuals, with the criteria differing for them. However, when outlining the requirements, they concern the age of the applicant, minimum monthly income, occupational stability, minimum credit score, and citizenship along with residential stability in India.
2. Choose a financial institution after detailed comparison
When selecting a financial institution to avail a personal loan from, it is crucial that you undergo a detailed comparison among available lenders. The comparison can be based on features available like the maximum loan availability, tenure flexibility, repayment options and the likes. You can also compare lenders based on other criteria like prepayment facilities, applicable levies and charges, and loan management facility. Make sure to choose a lender offering the lowest interest rates and charges as it would determine your overall affordability.
3. Seek to reduce interest rate levy
When planning to borrow a personal loan, you must also strategise regarding possible ways for interest rate as well as interest payable reduction. You can adopt a few ways to do so. For instance, when seeking to reduce the applicable rates, you can take measures like choosing a smaller loan amount than your maximum eligibility and repaying existing dues to improve repayment capacity.
Similarly, when planning to reduce total interest payable on a loan already availed, you can choose to prepay the advance to save significantly.
4. Use a personal loan EMI calculator to check affordability
You can easily determine your loan affordability with the help of an EMI calculator. These are dedicated financial tools that allow you to assess the impact of your loan amount and tenure selection on the EMIs payable, thus helping choose the most accommodative borrowing terms. You can also check total interest payable and the total loan liability payable for your personal advance with the calculator and determine total affordability accordingly.
5. Arrange all necessary documents
Another crucial step to complete before applying for the loan is to keep all required documents ready for paperwork completion. You may be asked to provide documents like ID proof, address proof, income proof, and any other document to complete the paperwork process.
When applying for a personal loan, it is best to go for the online application process. The steps involved in online application are simple, with all redundant steps eliminated to fast track loan processing. By meeting all eligibility and documentation requirements, you can only further streamline the entire loan process for easy approval.