What Questions to Ask Before Getting a Personal Loan
Personal Loan
Personal loans are one of the most common loans as they provide flexibility in terms of tenure, repayment, and usage, making them an absolute favorite of many.
Today, various lenders or financial institutions have attractive personal loan rates.
Within the chunk of choices, you must find the right one that suits your financial needs. MoneyTap is one platform you can explore to get a line of credit that can work like a personal loan!
You are given a credit limit that is available for a lifetime. It is recharged every month as you repay the borrowed amount.
Personal Loan Questions to Ask
There are a lot of factors to consider before taking out a personal loan in India. Here are all the questions you need to ask yourself before you dive in to begin the process of taking out a loan:
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What does my CIBIL score have to do when applying for a personal loan?
CIBIL score is the main factor that decides the tenure, amount, and EMI of your personal loans.
This score is like your financial report card that contains a history of all your previous repayment, from loans to credit card bills.
Lenders are always searching for borrowers with a strong CIBIL score. Check cibil score here, and if you have a good credit history, your chances of getting a loan approval increase.
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Do I really need a personal loan?
The first and foremost question that you need to ask yourself is whether you really need a loan.
This is a crucial question because most purchases are avoidable. For example, many people take out loans to fund their dream vacation or purchase a smartphone.
These expenses can wait until you can fund them on your own and save yourself from the burden of falling into debt.
Although a personal loan is available for such expenses, they are, in the end, debts that need to be paid with interest. So, it is wiser to wait, if you can.
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How much loan amount should I borrow?
Another question you need to ask yourself before applying for a loan is what amount you really need.
You need to know whether you can repay it within the set tenure. Some people make the mistake of taking out a heavy loan that they cannot afford to pay later.
So, it is better to consider the loan amount you actually need beforehand.
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What options do I have for the duration of my personal loan?
Personal loans are short-term loans; generally, their repayment duration lasts from 12 to 60 months.
Once your personal loan is disbursed, the EMIs begin within 30 days. The monthly installments and interest rates are affected based on the tenure and amount of your loan.
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What factors will determine my loan’s interest rate?
The interest rate of your personal loan depends on your CIBIL score, tenure, and loan amount. An excellent CIBIL score helps secure the best loans with the lowest interest rates.
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Will I be able to afford the EMI?
Calculating the EMI before applying for a loan is extremely important to know how much the total payment will cost you. An online EMI calculator can assist you with it.
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Are there additional charges? If yes, then when to pay them?
You might be charged 2-3% of the personal loan as processing fees. This amount varies from lender to lender.
Moreover, if you pay off the loan before its tenure, you might also be charged 2-3% as a prepayment charge.
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What documents are required to apply for a personal loan?
The documents required for a personal loan depend on whether you are a salaried individual or self-employed.
But usually, lenders need identity, residential and income proof, along with the purpose of the loan.
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How to verify whether the lender is genuine?
Many lenders can give a personal loan at attractive interest rates and features. So, it is advised you go to someone registered with the RBI who has a large physical and digital presence and strong technical support.
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Will I get tax benefits?
Personal loans do not carry any tax benefits unless you renovate your home and have proof of the same.
Moreover, if you use the personal loan to operate your business expenses, you can get a full rebate on your loan’s annual payout.
So, if you want to get tax benefits, ensure you take out debt with a specific goal in mind and relevant documents to show.
Author Bio:
Shiv Nanda is a financial analyst living in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India’s first app-based credit-line. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters, and when they want to get a loan. He has made it his life’s mission to help and educate people on various financial topics, so email him your questions at shiv@freopay.com.
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Category: Loans
