Sometimes, everyone finds themselves in need of a personal loan. In such situations, it’s important to ask yourself a few questions to avoid complications later. You should consider whether you prefer taking a loan through your credit card or from a bank. Additionally, it’s crucial to inquire about the repayment terms and how long you want to take to repay the loan. Let’s delve into these 7 questions.
How much money is needed?
Before taking any loan, you should ask yourself how much money you really need. If you need a relatively small amount, it’s best to first ask friends or relatives for a loan. If that isn’t possible, consider taking a small loan from your credit card. Taking a large loan from a bank isn’t advisable in such situations.
In how much time can you repay the loan?
Within 30 days, you will need to repay the loan company or bank in monthly installments. Most lenders structure EMIs between 6 months to 7 years. The sooner you repay the loan, the less interest you will have to pay, but keep in mind that defaulting on payments is a risk if you have insufficient funds to repay. Therefore, before taking out a loan, decide based on your income how soon you can repay it.
How much is the interest being charged?
If you take a loan, you will have to pay interest. Therefore, it’s crucial to determine beforehand where you can get a loan at a lower rate. Often, the interest rate varies based on the duration of the loan. So, before taking a loan, consider this factor and opt for the right loan amount at the right interest rate and tenure, to avoid paying more later on as interest charges.
Do I need to pay EMI or pay the lump sum amount?
When you take a loan, most borrowers start paying EMIs from the very next month. At the time of taking the loan, you need to consider whether you will be able to pay EMIs from the next month onwards or not. Also, keep in mind how much EMI you can afford. Many times, people need a loan because they cannot get money from somewhere or their funds are stuck somewhere.
In such situations, they want the entire loan amount, including interest, to be paid off after a certain period. Therefore, it is essential to ask yourself these questions before taking a loan.
What fees are charged on personal loans?
Before taking a personal loan, you should already know what fees are associated with it. You wouldn’t want to be attracted solely by the interest rate, only to discover additional charges like processing fees, filing fees, insurance, and various other charges. In such cases, the interest rate advertised for the loan might end up making it considerably more expensive than it initially appears.
How much is the credit score?
Your credit score plays a significant role when applying for a loan. Every bank checks this score before approving a loan. If your credit score is good, you may qualify for a loan at a lower interest rate. This gives you negotiating power. A good credit score, also known as a CIBIL score, indicates higher chances of being able to repay loans.
In how many days do I need the loan money?
If you are planning to take a loan, one important question to ask yourself is how quickly you need the loan funds. Certain banks advertise instant loan disbursement online, sometimes within just 10 seconds, whereas others may take up to 10 days to transfer the loan amount to your bank account. It’s prudent to apply for a loan based on these processing times.
