In the digital age, where everything is available easily, the financial sector has undergone a massive transformation. Personal loans have become preferred financial instruments over credit cards, owing to lower interest rates and hassle-free loan approval process.
An instant personal loan online is readily available and has become a standard financial tool. It is, however, no surprise that it can turn into a financial burden in the future. To avoid future hurdles, you need to ask pertinent questions before applying for a Fullerton India personal loan.
10 Questions to Ask before getting a personal loan
- How much amount do I need?
The first important question to ask is the amount of the loan. Instead of just randomly choosing a number, plan your loan. Define why you need the loan and then calculate all the expenses you will have to bear. An amount lower than this will hamper your plan, and a sum higher will increase your EMI and interest. So, ask yourself how much money you need.
- By when will I be able to repay the loan?
Along with the loan amount, keep track of the loan tenure too. Based on your expenses and liabilities, you can calculate the suitable period when you will completely pay off the loan. Your length of tenure will impact the monthly EMI.
- How much interest can I pay?
The interest rate is not fixed. It depends on several factors like income, credit score, loan amount etc. So plan the interest rate that you want to borrow the money at. It can be done by careful research or using the personal loan interest rate calculator.
- Can I afford the monthly payment?
Now that you have determined the loan amount, the interest rate and the tenure, calculate the EMI. It will give you a rough estimate of the monthly financial payment you have to make. Based on your present earnings and expenses, you can see if paying the required EMI is feasible or not.
Some lenders also provide an autopay incentive, which can lower your APR by 0.25% or 0.50%. Always know that longer tenure will reduce your EMI.
- Do I have to pay some personal loan fees?
Some lenders charge a processing fee from lenders applying for a personal loan. It is a onetime charge, which is added to the principal amount of the loan’s total cost. Usually, these charges are 1% to 6% of your loan amount.
- Is my credit score good?
The credit score is a vital factor for determining your loan tenure and interest rate. It is one of the important eligibility criteria that each applicant must fulfil. Prior to applying for the loan, make sure to check your credit score.
You can also plan your loan and work on improving your credit score by timely payments, not overusing the credit limit and many more.
- How soon do I need the funds?
Instant personal loan online apps help in delivering credit quickly in a seamless manner. Based on when you require the loan amount, you can choose your options accordingly.
- How should I choose my lender?
Based on the above criteria, look for various online lenders. Depending on the offers with the best loan terms, choose your lender wisely. It is also important to select known lenders who are registered with the RBI.
- What are my alternate options?
While a personal loan is a great option, there are other credit options too, such as credit cards, borrowing from friends and family, opting for a secured loan and many more. Make sure you are not ignoring those options while seriously considering a personal loan.
- How will the personal loan impact my credit score?
Personal loans, unlike credit cards, are instalment credits. If you have a healthy credit mix, then it positively impacts your credit score. Therefore, analyse if a personal loan will help you in your future credits.
Personal loans are a great credit option, but it offers maximum benefits if planned well in advance. You can also take advantage of debt relied programs. These questions will help you reap the maximum benefits from your loan and not let it become a strain on your finances.