The pandemic has hit the nation hard, where it hurts the most, in the pockets. This is quite evident based on a recent survey conducted by the Economic Times on the impact of COVID-19. The survey reports that roughly 39% of the 3,074 respondents said that are facing a salary cut in their current jobs.
Hence, at this moment, a personal loan definitely qualifies as a pay-off boon than as a bane of liability. The amount borrowed using a personal loan can be utilized to fulfil financial obligations like education fees, restocking of business inventory or even medical expenses.
A personal loan will not only help you traverse your current financial crisis but, also help build your credit score, provided you repay your instalments on time. However, mistakes do happen and in case of personal loans, the biggest mistake one can make biting off more than you can chew. I.e. taking a significant amount without having the means to pay it off. This can lead to a disastrous credit score and eventually, a huge financial backlog for you in the long-term. Not only this, it also reduces your chances of getting a personal loan or any loan for that matter in the future when you may require it.
So, how to ensure this doesn’t happen and that your personal loan application does not get rejected? Here’s how to take out a loan?
Step 1: Assess your requirement The first and most essential step is to assess your requirements accurately. While this may sound easy, it can actually be the most difficult part of your personal loan journey. The loan amount should be enough to fulfil its end goal and at the same time, easy to service based on your cash flows. Ensure that the loan amount is enough to avoid any need to borrow again, as the same significantly affects your credit score.
Step 2: Find out your credit score The eligibility for a personal loan and the interest rate that will be charged depends on your credit score. If you have borrowed money at any time, by using a credit card or any other form of loan, then you are likely to have a credit score. At times, a credit score may have errors, which may explain the low rating. It is highly recommended to check your score regularly for such errors and bring it to the notice of the credit bureau to rectify it. With the Finserv MARKETS app, checking your credit score is now more convenient than ever! All you have to do is download the app, register and claim your free Financial Health Check Report (FHCR)!
Step 3: Find out the costs involved Many loan agreements have hidden costs that are often visible only after the loan is approved and disbursed. Aside from interest costs, a personal loan also includes other charges such as processing fee, foreclosure fee i.e. if you want to pre-pay / foreclose your loan, late payment fee, taxes and other charges etc. It is best to note down all the charges and costs that will be incurred, and then compare it with that of other lenders.
Step 4: Check the fine print Whether you are getting your personal loan via an agent or applying it yourself, make sure you read the fine print. Many a times, there are details hidden in plain sight that you need to be cognizant of, yet you may overlook in the hurry to get the loan approved. Getting the funds is easy, applying for it and getting it approved is the trick. Make sure you read every instruction / terms & conditions carefully and fill the forms duly, to avoid the chances of getting your application rejected.
Step 5: View pre-approved offers It is likely that a financial institution already has a pre-approved loan waiting for you. Borrowers can find these offers on the website of a bank or a Non-Banking Financial Company (NBFC), or contact their sales team to find out the details.
Step 6: Look for ease of application and disbursal A good lender should have a secure profile and an easy, preferably online way of processing things. Easy application, approval and disbursal ensure a hassle-free experience for the consumer.