4 Must-Follow Rules For Personal Loans
Here are top 4 personal loan rules you must keep in mind while borrowing. Read to the key rules you must follow to avail personal loans easily!
Personal loans are the most popular among the many types of loans available to people. Their popularity is primarily due to their freedom of use, i.e., the borrower can use them however they see fit.
Typically, the funds are beneficial to pay for long overdue vacations and family functions such as weddings and birthdays. It's also common for people to use these to make down payments on a house, a car, or even to furnish their homes.
However, there are specific rules for personal loans that borrowers must follow.
4 Personal Loan Rules and Regulations
1. Borrow What You RequireBorrow less than you can afford to repay, even if you get approved for a large loan. Repaying any loan is more problematic and expensive than borrowing. A good rule of thumb is to keep your total monthly loan repayments below 40% of your gross monthly income.
2. Don’t Take Out Multiple Personal Loans
The credit bureaus will consider you credit-hungry when you take out a second personal loan without paying off the first. Moreover, taking out multiple loans increases your debt and negatively affects your credit score.
However, if you have multiple loans, you can consolidate them by taking out a big loan with a competitive interest rate. Your CIBIL score will gradually improve.
3. Calculate Your EMI Before Taking LoanKnowing the EMI amount before taking the loan will help determine if you can handle your finances while paying the same. Many lending institutions now have EMI calculators on their websites. This tool can resolve which loan amount, tenure, and EMI will suit your budget.
4. Choose A Lender WiselyVarious financial institutions offer personal loans. However, the terms and conditions vary. They may appear attractive to some borrowers due to their specific norms. Using an aggregator online can help you compare loan terms and interest rates.
How To Choose The Right Personal Loan Lender for You
Personal loans can be a lifesaver when you're in a financial bind and need quick access to funds. Many individuals turn to personal loans as a last resort. Often, when people want a personal loan immediately, they only consider the approval and disbursement times as well as the interest rates.
However, you must look for a few other factors to avoid getting trapped in a personal loan that is unsuitable for you.
1. Short Repayment Tenure
If you take out a loan, you should repay it as soon as possible. However, lenders with a short repayment period will charge higher EMIs due to the smaller number of installments.
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When you default on loan repayment, your credit score may be negatively affected, which could discourage lenders from granting you loans in the future. Hence, although you might be hoping to become debt-free soon, gauge your repayment capacity and choose the loan tenure that works for you.
2. Competitive Interest Rates
Numerous lenders may approach you with attractive and marginally low-interest rates. While these loans might look appealing, many other unreasonable loan terms can lead to you paying more when you choose such low-interest loans.
Before you apply for a personal loan, you should study and compare the interest rates of different lenders.
3. Origination Fees
Personal loans may be subject to origination fees from some lenders. Origination fees are fixed amounts lenders require you to pay when submitting the loan application or when the lender verifies the application.
Tracking various lenders’ origination fees will help you avoid exorbitantly high charges and decide appropriately.
4. Customer ExperienceHow many hours does the lender operate? Can you reach them by phone, email, or chat? Is there a physical location where you can get assistance? Consider these questions when evaluating lenders to determine their accessibility.
Get The Best Personal Loan Benefits With IIFL Finance
Want a lender that provides these benefits and more? Visit IIFL Finance website now.
Personal loans from IIFL Finance offer instant funds up to Rs 5 lakh and quick disbursement. You can use these funds to finance vacations, and weddings, purchase the latest gadgets, pursue higher education, buy a vehicle, or renovate your house. A leading Indian financial company, IIFL offers the highest monetary value on personal loans. Apply today!
Frequently Asked Questions
Q1. What factors affect personal loan eligibility?
Ans. Eligibility factors for Personal Loans include:
• Credit Score
• Employment Status
• Monthly Income and Debt-to-Income Ratio
• Lender Relations
Q2. How much loan amount can I borrow from IIFL Finance?
Ans. With IIFL Finance, you can borrow up to Rs 5 lakhs for a personal loan.
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