One might find the need to opt for a personal loan for a variety of reasons but it is always a good idea to compare the rates before settling in on a loan from a particular bank or a financial institution. It doesn’t hurt to look around a bit because one just might come across a bank which charges lower rates of interests than you had expected.
Before applying for a personal loan, it is also important to check off a few pointers to see your personal loan eligibility. Here are some things that you need to know:
How is Your Credit Score?
A good credit score is a prerequisite while you apply for the personal loan. Unless and until the creditors see a good CIBIL score and have a credit history that details your repayment behavior, they might not be convinced about loaning out a lump sum to you. So before you apply for the loan, go through the ups and downs of your credit history and make sure you correct them and improve your credit score as much as possible before approaching a creditor.
Look for Better Rates of Interest:
While most banks and financial institutions charge the same rate of interest, in keeping with the Central Bank of the country, there are often variations depending on certain circumstances. For example, there is usually a difference in the interest rates charged on secured and unsecured loans, with the latter being more than the former. However, if you are sure you will be able to pay back the loan for sure, opt for a secured loan instead of an unsecured one, that is, offer collateral like an FD or your amount from your savings. That might bring down the interest rates to quite an extent. Bajaj Finserv charges competitive interest rates for personal loans and its experts would be able to guide you through the other intricacies of borrowing.
Avoid Organization Fees at All Costs:
Those who are applying for a loan the first time might be completely unaware of this additional fee that is charged by most credit unions, and only come to know of it at the last stage. These are one of those hidden fees that we never seem to know about till the actual transaction is being made. Some banks and credit unions just charge an extra amount because the money is being simply being borrowed by a personal loan. This is one of the ways in which banks make money and if you are on a tight budget, avoid paying these extra amounts.
Consider Debt Consolidation:
Another way to ensure that your personal loan is not denied is to opt for a debt consolidation plan, in case you already have other debts that you have had before. This would significantly reduce your interest rates and allow you to keep track of your debts in a better manner. This is especially true for those who have large outstanding debts on their credit cards or have other unsecured loans taken before. The objective is to show your creditor that you are a reliable source of investment and eventually they are going to get their money back.
Documents Required for Personal Loan
The most important documents that one might have to produce while applying for the loan are, monthly pay slips, IT returns for the last three consecutive years, credit report and CIBIL score and proper identification. The credit report will have all your transactions through credit card and any major bills that you might have paid off. While these are the major documents, some banks might also ask for your address proof, your rental slip paid towards your accommodation or valid proof that you also have another source of income, increasing your loan eligibility.
All things said and done, some might still look for other ways of borrowing money because in spite of all their research and with their current credit scenario they might find the personal loan rate of interest to be quite high. However, when you are in dire need of money, this is definitely a safe and secure way to tide over your emergencies.