Factors to Consider Before Opting for a Personal Loan

Personal Loans are considered to be one of the quickest ways of getting access to instant funds. The best part about this loan is that it can be availed without the need for any collateral. There are number of lenders available these days including Non-Banking Financial Institutions (NBFCs) who offer unsecured personal loans which are easy to apply and avail. 

Apart from this, personal loans can be used for any kinds of needs be it for educational purposes, emergency travel, home renovations, medical expenses, weddings and anything else. As such a personal loan can become one of the best solutions for your financial needs.

Must Read: Applying for a Personal Loan for the first time? Follow this checklist

However, with any loan, in case of personal loans too, you need to remember a few points before applying for it, a few of which are as follows - 

Credit Score

One of the most important Personal Loan eligibility criteria when applying for a personal loan includes the credit score. A credit score of 750 or above is should be maintained to ensure that not only does your loan get sanctioned but you also get a lower interest rate. 

One of the best ways of improving your credit score is to clear out all your existing dues and bills. It is also worth noting that opting for a personal loan has a positive impact on your credit score. It can also be used for debt consolidation by paying multiple lines of credit using a single loan. This helps in bettering your credit score significantly. 

Monthly Income

Before applying for a personal loan, ensure that you will be able to pay the installments and the benefits of personal loan that lenders will offer you. For this, you will need to consider your existing expenditures and then consider whether there is enough room for paying the monthly installments without burdening your finances. 

Interest Rate

This is something which will have a direct effect on your monthly installments. The higher the interest rate, the higher will be the installments. Different lenders offer different rates of interest so ensure that you conduct a thorough research before deciding your lender. Most NBFCs offer attractive interest rates.

Read Also: Top 5 Factors to Consider Before Taking a Personal Loan

With a personal loan, you can look forward to loans of up to Rs. 25 lakhs and get an online loan account too. The documentation required is minimal and once approved the loan amount gets disbursed very quickly.