Questions worth asking yourself before applying for a personal loan

A personal loan has been one of the most popular and convenient sources of financing for several years now for all your personal or professional reasons. No restrictions on end-use of loan, bare minimum documentation, and swift disbursal of funds are some of the major advantages of applying for a personal loan that can excite anyone in need. Additionally, there is no requirement for collateral which makes it even more convenient. However, some pointers should not be overlooked, and therefore here are some questions that you must ask yourself before you apply for your personal loan:

 

Before applying for a personal loan, how crucial is it to check your credit score?

Given that a good credit score can help you get a loan, lenders analyze your personal loan application based on these crucial criteria. If you have a decent credit score, you can avail the Paylater ICICI Bank feature using which you can use the credited amount and pay in the next 45 days with no extra charges. It is a very good practice to read your credit report at regular intervals. If you already have a personal loan currently, your credit points can help you Top up Personal loan if you need more funds. Paying your loan EMIs and credit card payments on time and keeping your credit usage ratio under 30% are some of the habits that one must incorporate into their routine. These are the basic parameters that are analyzed while deciding your interest rate if you wish to apply for a personal loan. In case you are confident that you will be able to repay the entire amount in a month, you can consider using the feature of Paylater ICICI Bank instead of taking a personal loan.

Furthermore, don’t forget to review your credit report regularly to ensure that any inaccuracies or probable fraud do not go unnoticed. If not done carefully, it can negatively impact your credit score and loan acceptance chances.

 

Is it wise to take a personal loan during an urgent shortage of funds?

Despite the best financial planning and regular saving, forcing us to borrow funds to pay unexpected or unmanageable bills is something that all of us might have faced at some point in our lives during an unexpected emergency crisis. In such cases, taking out a personal loan is probably the first option that comes to our mind since it meets the needs of a diverse section of society. However, you do not need a freshly apply for a personal loan in case you already have one; simply use Top up Personal loan, and it adds up to the previous loan amount.

 

Who is the best lender for you?

Having so many banks and fintechs that offer a varied range of interest rates, it becomes almost impossible to choose the best money lender for yourself. The presence of fintech companies that offer features like Paylater ICICI Bank and personal loans for smaller loan amounts and shorter terms to meet borrowers’ urgent needs for short-term funds has made it even more important for borrowers to choose the right loan product. As a result, it is important to analyze various prospective lenders before deciding the best for you. Take a close look at the features of the bank, and above all, your eligibility and loan requirements must align with their terms and conditions. Several other important parameters like processing fees, prepayment penalties, and other terms and conditions should also be considered while deciding if you do not own a personal loan already; otherwise, you can Top up Personal loan.

 

Why not use a credit card instead of a personal loan?

If the sum of money that you need is too small and the need is too urgent, in such a situation, you can use your credit card. In case you are unable to pay the credit card bill by the next due date, you can consider paying it back in the form of EMI within the next 60 months. Otherwise, opt for a personal loan that suits all your requirements after comparing all the available lenders. However, if your loan amount is substantially large, you must always choose a personal loan or Top up Personal loan that already exists. Using a credit card will charge you more rate of interest compared to a loan for the same credit profile. Additionally, if you take a personal loan or opt for Paylater ICICI Bank, you will be able to maintain your credit limit also.

 

What is the right tenure for a personal loan?

Your EMI to income ratio, which is the percentage of your existing income that is used for EMI repayments, is something that is analyzed by many lenders even if you Top up Personal loan. It is preferable to have a FOIR of at least 40%, which also includes the EMI of the new personal loan. Hence while choosing the tenure, you must keep this in the advisable range. You must also know that choosing a longer tenure will consume more interest amounts; as a result, you might waste a lot of your money, so it is advisable to repay the loan amount as soon as you have a bonus income.

 

 How to get a personal loan with a low credit score?

Those with a poor or no credit score may suffer personal loan rejection because several lenders fear credit risk due to low credit scores. However, in some cases, lenders charge a high rate of interest to people with low credit scores to compensate for the same, and therefore there can be a significant difference in the rate of interest offered to you. This is why you should not refrain from comparing several lenders before settling for one. You can also consider opting for Paylater ICICI Bank in case you face a personal loan rejection. 

 

Furthermore, if you already have applied for a personal loan but still need some extra amount for all the unanticipated expenses, you can Top up Personal loan, which requires no extra documentation. 

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