Useful Tips to Apply for Your First Personal Loan

From financing vacations to urgent treatments, a personal loan helps you manage all types of expenses. Getting this unsecured loan requires you to meet certain eligibility criteria set by the lender. 

Hassle-free approval depends on your eligibility and on choosing a suitable option. A finance marketplace can be the ideal place to search for and compare the personal loans offered by different lenders. It allows you to easily compare the interest rates, maximum loan amount, maximum loan tenure, and so on. 

Guide to Personal Loans

A personal loan can be used for any purpose and does not have any usage restrictions. You can take this loan to finance:

• 1. Home renovation
• 2. Wedding
• 3. Education/Upskilling
• 4. Hospital treatment
• 5. Vacation/Work Travel
• 6. Electronics & Appliances
• 7. Vehicles like car or bike 

You do not need to pledge collateral or security to get a personal loan. The best part is it requires minimal paperwork. However, this parameter varies across lenders, so check the requirements before applying for one.

According to the terms you agree on with the lender, you can repay it like any other loan. You can choose the duration over which to pay Equated Monthly Instalments (EMIs) to make the experience as comfortable as possible. 

6 Useful Tips To Keep in Mind 

When applying for a personal loan, be smart. Do not borrow more than you can repay, and choose a convenient repayment period. It is also important to apply with a lender who is reputable, offers good customer service, and has transparent fees and charges. 

Make sure that you also think about your credit score, the loan’s interest rate, and the additional fees that apply. Checking these factors helps you make the best decision when choosing your loan offer. Here are six things to consider when applying for a personal loan:

1. 1. Have a Good Credit Score

A credit or CIBIL score of 750 and above is ideal. Since it is based on your behaviour and history with credit, this number showcases that you are responsible and creditworthy. While lenders may require different minimum scores to consider you eligible for this loan, this is a safe score to aim for. 

Here are some tips to increase your credit score:

• 1. Pay your credit card bills on time and in full
• 2. Pay your loan EMIs diligently across the tenure 
• 3. Avoid applying for multiple loans or cards in a short period
• 4. Try not to use more than 30% of your credit card’s limit 
• 5. Avoid closing old credit card accounts, as these demonstrate that you are adept at managing finances

If your credit score is low, it means you have trouble managing debt. This can lead to loan rejections or higher interest rates on personal loans.

2. 2. Check the Charges

Personal loans come with various fees like processing, prepayment, and late payment fees. So, before you apply, check all the fees your lender charges. This will help you review the total costs and decide if the loan is affordable for you. 

It is always a good idea to choose a lender who discloses all costs upfront. This helps you assess future costs and keeps you from being surprised later. 

3. 3. Compare Interest Rates 

Rates that apply to loans are based on the financial company’s internal policies and your eligibility. Thus, they differ from one to the other lender. Check the rates and compare them to find the best offer. 

A low interest rate will ensure that your total cost of borrowing is reduced. This helps repay the loan hassle-free. 

4. 4. Evaluate Your Loan Repayment Capacity

Before taking a personal loan, plan how you will repay it on time. Here is how:

• 1. Use a personal loan calculator to choose the right loan amount and tenure, and estimate your EMI in advance
• 2. Tenures usually start from 3 months and go up to 5-6 years, and a longer tenure requires you to pay more as interest but reduces your EMI
• 3. Assess your fixed expenses and current debt to check if you can repay this amount 
• 4. If not, adjust the loan terms until you arrive at a satisfactory figure 
• 5. Have a backup plan to ensure you can pay EMIs on time, such as a contingency fund or savings that you can liquidate 
• 6. Choose the shortest tenure you can afford to keep your interest payments low 

5. 5. Avoid Offers That Are Too Good to be True

Some lenders may advertise special deals that are different from other offers in the financial marketplace. Be wary of such offers, and use these tips:

• Read the disclaimer and fine print, and you may find that these loans cost more than you had expected
• Be aware of floating interest rates, as these may start from a low value but could increase drastically over time

6. 6. Understand Your Needs

Taking a loan should be a decision you have taken calmly and carefully. To ensure you do not rush into anything, follow these pointers:

• 1. Make a list of the most important things you will use the loan amount for
• 2. Check your eligibility and credit profile to see what you qualify for 
• 3. Plan repayment based on your current earnings and savings 

When you are ready to get a personal loan, these tips will come in handy. To get all the information you need at your fingertips, apply for a personal loan on Bajaj Markets. This finance marketplace allows you to compare loans from over 15 partners. 

You can check their fees, rates, and maximum loan amount to make the best decision that suits your needs. The EMI calculator on this platform also helps you forecast your monthly instalment and plan your loan better. To benefit from speedy processing and 100% digital processes, get a personal loan on this platform today!