Rashmi Sharma is a married woman with two kids. She has secured an excellent job and earns a good salary. She wishes to go for a vacation abroad with her spouse and kids. Though she plans on borrowing a consumer loan to fund her vacation expenses, she would find it rather handy to obtain some advice on borrowing.
If you also intend on taking up a loan, here are 20 effective facts and tips to consider
- Borrow only what is required
Do not borrow extra as it will only add to your financial burden later.
- Decrease the loan tenure
Reduce the tenure of the loan, if your budget allows you to do so. Shorter loan tenure cuts down a significant amount as interest.
- Pay your credit card bill through a personal loan
If you have outstanding debt on your credit card payments, borrow a personal loan to pay the credit card bill. The interest rates on credit card payments are higher than that of personal loans.
- Do not provide collateral
Personal loans are generally unsecured loans. Therefore, no collateral is required against the loan.
- Know the economic conditions
In case you are not in dire need of cash, it is advisable to wait till the economy weakens. At such times, the interest rate on loans falls down.
- Make regular payments
Make payments of fees and charges upfront. Delayed payment will only lead to additional payments.
- Understand all terms and conditions
Read all the terms and conditions of the agreement very carefully before signing on the dotted line.
- Maintain a copy of your cheque
Keep a copy of the cheque you have written for your repayments. In case the lender claims to have not received your cheque, you have a proof that you have made the payment.
- Analyze your credit score
Make sure you have a good credit report before applying for loans. You may get a lower interest rate if you have a high credit score.
- Check the rate of interest
The rate of interest may have changed since you last checked. Hence, verify the same before submitting your application.
- Submit all required documents
Submit a duly filled application form, along with supporting documents. The approval process gets initiated faster if all documents are in place.
- Compare lenders
Conduct a research and compare various lenders to avail of the best rate.
- Know your financial capacity
Borrow according to your capacity. To avoid difficulties, you should not borrow more than you are able to repay.
- Apply online
Most lenders have an online presence. You may apply for personal loans online. Online application is a hassle-free option.
- Conduct extensive research
Conduct research about banks and lending institutions before applying for loans. Once you are convinced with their reputation, only then go ahead with your application.
- Make timely repayments of your EMIs
You may have to pay late-payment charges if you fail to make payments before the due date.
- Don’t worry if you have a poor credit score
In case you have a bad credit, you may avail of bad credit consumer loans. However, the rate of interest on such loans is higher.
- Adjust the monthly EMI based on your cash flow
Many lending institutions provide consumers the flexibility to increase or decrease their EMI amount based on their current financial position.
- Gain extensive knowledge
Know about the fees and charges associated with loans, namely part-prepayment charges, cancellation charges, processing fees, besides others.
- Do not take up personal loans for investment.
If the investment fails to perform well in the market, you will incur huge losses.
It is important to keep certain factors in mind before applying for a loan. Follow the above-mentioned nifty tips for a hassle-free borrowing experience.