Are You Ready For A Personal Loan?

If you are considering a Personal Loan, this is your quick guide to finding out if you are ready for it.

Be prepared for the EMI

Let the EMIs on your Personal Loan not be a surprise for you. Calculate your EMI before submitting the loan application so that you get an idea of what to expect. Need help with that? Use an online Personal Loan EMI calculator. It’s that simple.

Hidden charges in a Personal Loan

The EMI is not the only factor you need to plan for when you take a Personal Loan. You also need to factor in the processing fee, prepayment charges, and any late payment charges if you skip an EMI payment.

A processing fee is charged on Personal Loans by banks, to process your loan application. This fee generally ranges between 0.2% to 5% of the outstanding amount of the loan. A few banks may levy a fixed processing fee on all Personal Loans.

Additional Reading: Get A Sweet Deal When Prepaying Your Personal Loan

A prepayment penalty may also be charged and this might be approximately 2% to 4% of your loan amount. This penalty varies from bank to bank.

Defaulted on paying an EMI? Look out for a late payment charge at about 2% every month.

Additional Reading: How To Get The Best Personal Loans

Are you eligible?

Remember that since a Personal Loan is an unsecured loan, banks take the eligibility of an applicant quite seriously. Show them that you are continuously employed with a decent pay cheque to your name, and you’ll be good to go.

The banks will also want to see your proof of identity, proof of address, latest payslips and Form 16 from your employer.

Check This: Personal Loan Document Checklist

Credit worthy?

Your credit history is a very important factor that decides your loan application. A good Credit Score would mean that you were out of the woods.

Was your application rejected? Find out how you can fix your Credit Score and give that loan another shot.

Additional Reading: More Tips To Boost Your Credit Score

It would be a good idea to evaluate if you really need that Personal Loan before you submit your application.

If you think you can manage a Personal Loan, go ahead.