A personal loan has multiple usage options, which are unique in nature. One can get a personal loan within a few hours. That is why a personal loan is a preferred instrument. But interest rates of personal loans are very high, so one should check his/her eligibility before taking the loan. Money9 gives a nine-point guide on how to handle your personal loan smartly.
Make Repayment in time– Paying the EMI’s on time is a must for a borrower. Missing an EMI will lead to penalties from the lender and harm your credit score.
Pay lump sum- If possible pay a lump sum amount once a year during the tenure. That can reduce the EMI burden.
Negotiate for better rates – There are a lot of rates in the market. Experts say one needs to negotiate the service terms with the lender, to get the best possible interest rates.
Choose a short tenure – An important factor to be considered while taking a loan is tenure. The shorter the tenure, the disposal of the loan will also be quicker. However, but the EMI burden will be more.
Fix the amount- Before taking a personal loan, fix the amount you want to take a loan for. Try to make it as low as possible to make your burden a bit easier.
Processing fees- Many banks levy processing fees, documentation charges while sanctioning a personal loan. Check all extra charges before opting for a loan.
Insurance- Banks like SBI and others generally insure the loan if the amount is more than Rs 5 lakh. In that case, the customer has to pay the premium.
Special offer- Banks generally offer multiple things such as zero processing fee, instant disbursement etc. So, one should check all the eligible offers before applying for a loan.
Credit score- Personal loans directly affect one’s credit score. Try not to default a single EMI to mark yourself a smart lender. Check your capacity first and then proceed.
Experts always advise repaying the loan in time, without missing a single EMI. This would help the person in the future.
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