IndiaLends Advisory

By IndiaLends Advisory

Jul 20, 2018

Questions To Ask Before Taking A Personal Loan

I can’t blame you if you just watched Zindagi Na Milegi Dobara and were filled with a desire to visit Spain. Afterall, you do get only one life. Why not live it to the fullest? Let’s see another scenario. Your wedding is coming up. You intend to do it only once right (at least right now)? Why hold back? You definitely deserve the dream wedding. Or maybe this monsoon you just realized that the house needs improvement and you have been putting it off for a long time. Why not get a renovation done? So you decide that you are going to realize your dreams by taking a personal loan. It is only logical that you spend some extra money every month rather than all at once. Makes sense. But before you get a personal loan, ask yourself the following questions-

 

Is a Personal Loan Right for me?

Do not rely entirely upon the loan amount. Analyse your need and your savings and then decide whether or not you should get a personal loan. If you have a steady source of income then taking a personal loan is definitely ideal.

 

What do I need this personal loan for?

If you are going to use this loan to finance your wedding expenses, then you will definitely save on a lot of interest if you get a personal loan as opposed to using credit cards. For a trip, if you own a travel card already then you might save much more than that by using your card. So you need to understand your purpose before making the decision.

 

Will borrowing money help me?

This goes hand in hand with the first one. Once you have understood your purpose, you must check if the personal loan is going to help you with that purpose. The returns you obtain from if you get a personal loan, should be worth it.

 

What will my monthly payment be, and can I afford them?

The amount of money that you borrow should not only be enough to fulfill your need but also not burn a hole in your pocket. As long as your day to day life is not being hampered by taking this loan, you are good to get a personal loan. But if this loan is going to make every month difficult for you, maybe it is better to refrain.

How long will I be paying this loan off?

More often than not we concern ourselves only with the rate of interest when considering a personal loan. The tenure of a loan is also something that we must consider before we get a personal loan. Typically the tenure of a personal loan varies from 6 months to 5 years.

What is my credit score?

Your credit score has A LOT to do with what offers you receive when you get a personal loan. Your credit score determines how well you will be repaying the loan. Hence more lenders would be interested in providing you with one. You can check your credit report for free.

 

What interest rate will I pay for the loan?

This one is a no-brainer Don’t go to the first lender and accept the rates they offer you. Your interest rate would determine whether or not the loan offer is worth it at the end of the day. Also, check if the rate is going to be fixed or floating before you get a personal loan.

 

Related article: Understanding Credit Report: Everything You Need To Know

 

Do I need to pay any extra fees?

Most people do not pay attention to fine print. But then we do not want you to be most people. We want you to be clever with your money. Pay close attention to the details. Especially any extra fees that you might need to pay in lieu of foreclosure, late fee etc.

Am I likely to be approved for the loan?

Seeing how this industry has been growing, odds of getting approved for a personal loan is much more than getting into college. That is if you do not have a history of taking credit from lenders irresponsibly. Check the criteria with the lender and ensure if you fall into that category before you get a personal loan.

What is a said to be a good deal in personal loans?

The term good deal is a subjective matter. For one person getting a loan for 12% might be a blessing whereas another might argue that they should get it at 10.75% only. So to understand whether or not it is a good deal you need to analyze two things. How urgent is your money requirement? And how has your credit history been?

Is the personal loan flexible?

A new concept has been taking the industry by storm. It’s called Flexi Loans. It is basically a line of financing provided to you based on the basis of your creditworthiness. Then you can borrow from that credit line as many times as you want and prepay as per your convenience. The interest you are liable to pay is only on the amount you’ve utilized and not on the entire line.

How do I get a personal loan?

You can apply for a personal loan both online and offline. Read which one is better- Applying Online Vs Applying in Person. And did we tell you? Getting a personal loan has never been more simple. Just head over to IndiaLends and apply now.

 

In total, how much will I pay for my personal loan?

What is the one thing that worries us about loans? We will pay extra. Do the math. The most important question to ask before you get a personal loan is how much is it that you would be paying in total.


Will I need a co-applicant?

When you get a personal loan, you commit to the repayments. If your income is not high enough, a lender can refuse to give you the entire amount that you are seeking a loan for. If that is the case with you, you can get a co-signer on the loan. Ensure that all the co-signers to the loan fulfill the bank’s eligibility criteria.

Can I trust this lender?

The relationship that you share with your lender is based on trust. There are too many fake lenders that can easily set you up. Hence you need to very cautious before you pay money or spare your details.

 

Do I have the documentation I need to apply for the loan?

Documentation is essential when you get a personal loan. You need to prove the source of your income and your credit score etc. You can go through this Personal Loan: Application Checklist to check whether or not you have everything you need.

 

Can I foreclose the loan?

Most lenders give their customers an option to prepay the loan. The criteria may however differ. For example, some lenders allow prepayment after a certain time into the loan and some allow the prepayment only in multiples of the EMI. Check the terms of prepayment before you get a personal loan.


Are my personal finances in order?

Say you have an amazing job right now. So you are not worried about paying back your loan. But seeing how unpredictable life has become today, one can never be a 100% sure about anything. Check your finances. Can they take a setback if you lose your job? Because the EMIs won’t sit around while you look for another one.

 

How will the loan be repaid if I die?

This might sound a bit morose. But you can not rule out the possibility. (Unless of course, you have the gift of immortality) Loan repayments can get tricky in case of the death of the borrower. The repayments can be carried out by the co-applicant if any. The lender also might have to write off a debt if you do not have a co-applicant so check your terms carefully.


Is there a second product being sold to me?

It is impossible for us to read the fine print. We get it. But more often than not. Financial institutions that lend money are also into the insurance business. And since businessmen are no fools, they might try to sell you other products while selling their loan. Check thoroughly if there is a second item added to cart before you sign papers.

 

Pro Tip: Ensure that you read the final papers very carefully. There have been cases reported where customers have been cheated by a change of terms at the very end of the procedure. Make sure to check your numbers right before you sign the papers. And do that when you are at ease and not in a rush. Better getting money late than seeing it never.
When you go to get a personal loan, there are innumerable things that you need to take care of. Hence it is always better to apply through trusted online portals. Not only they customize offers according to your credit score and preference, they let you compare multiple offers and choose the EMI structure. At literally the tap of your fingers. You can read the terms carefully in as much time you want so there is no question of making a mistake in a hurry.

Do you feel we missed out on any questions? Do let us in the comments below. Until next time!

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