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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.

“While it feels good to get your personal loan approved quite easily, it is just as important to pay it back on time. This helps keep the borrower’s financial position in good shape and also makes him creditworthy,” said Nilotpal Banerjee, a personal finance expert based in Kolkata.