A personal loan can be helpful when you need extra funds, such as for medical bills, home repairs, or to host family gatherings. However, before applying, it is essential to understand how personal loans work and what to look out for. Below are a few easy tips to get the best deal and avoid problems.
1. Understand the Purpose of the Loan
First, understanding the purpose of a loan is essential. Are you taking out a loan for a wedding, to fund your education, or to cover an emergency? Once you know the reason, assess the amount of money you need to borrow. You should never borrow more than you need.
2. Use a Personal Loan Calculator
Before applying, try a personal loan calculator. It allows you to estimate your monthly repayment (known as an EMI) amount. You will know based on that whether the loan fits your monthly budget or not.
3. Verify if you’re eligible
Lenders check your income, occupation, and CIBIL score (credit score). A good CIBIL score will increase your chances of approval. You can improve personal loan eligibility by:
- Pay bills on time
- Reducing credit card usage
- Not applying for too many loans at the same time.
4. Compare Loan Offers
Each bank and each lender may have different rules. Before you choose one, compare lenders. Consider:
- Interest rates.
- Processing fees.
- Repayment terms.
- Any hidden charges?
Having the lowest interest rate doesn’t always mean the best deal. Always read the terms.
5. Select the Appropriate Loan Period
The longer your loan period, the lower your EMIs will be, but the more interest you will pay in total. The shorter the loan period, the higher your EMIs will be, but you’ll pay much less interest. Choose what makes the most sense for you.
6. Prepay Early If Possible
If you receive a tax refund, a year-end bonus from work, a cash gift, or any other form of additional money, consider prepaying your loan. A bank may charge you a nominal fee, but it reduces the total interest amount you have to pay. Be sure to ask the lender before signing.
7. Pay EMI on Time
Make sure you never delay or miss an EMI payment. It will negatively impact your credit score, and you will incur penalties. You can set up auto-debit or use a reminder. You should always pay off your loan before spending your discretionary income on other things.
8. Select a Trusted Lender
Don’t take a risk by trusting just anybody who might want to lend you money. Choose a trusted lender or platform that is clear and safe.
How The Lending Monk Can Help You
The Lending Monk is a website that helps you find a personal loan and apply for a loan easily.
Here’s how it helps you:
- It has a personal loan calculator to check EMIs
- You can check whether you meet the eligibility criteria for the loan within minutes
- You can compare loan offers from different banks
- We explain the interest rates, loan amount, and rules properly
- We are very responsive in their communication and explain step by step of the lending process
The Lending Monk makes it simple, even for your first personal loan; there’s no confusion or hidden charges.
Final tips
Ultimately, obtaining a loan is not daunting, but making a thoughtful decision is crucial.
- Know why you need the loan.
- Borrow only what you need.
- Check interest, repayment, and your CIBIL score
- Use tools like the loan calculator
- Use trusted sites like The Lending Monk
If you apply all these tips, you can easily obtain the right personal loan without worrying.