Applying For Personal Loan: See This Checklist First

Whether you will get a personal loan or not depends on many things. There is no collateral requirement on a personal loan, but banks first examine you and only after that they issue the loan. In this, your age, your income and your credit score matter the most. Generally, if your monthly salary is above a certain threshold, banks give you a loan. Banks want to ensure whether you are in a position to repay the loan or not. And how much loan can be issued to you according to your salary. Loans are issued to people between 21 and 60 years of age. It is also seen how long you have been in your job. Generally, 1 year experience is preferred. See this checklist before applying for personal loan:

1. CIBIL Score

Before giving a loan, banks definitely check your CIBIL score. CIBIL Score is a 3-digit score which comes in the range of 300 to 900, from this it is seen how easily you take a loan and repay it, or what is your habit of loan transactions. CIBIL score contains your credit history. Your credit history and credit rating are seen in your credit report. Banks prefer a score above 750 for issuing personal loans. You can easily check your credit score online.

2. Personal Loan Interest Rate

Before applying for a personal loan, you should check which bank is offering the loan at what interest rate. There may be different interest rates on the loan depending on your loan amount. Interest rate is a big factor because it calculates how much interest you will have to pay on the principal loan amount.

3. What is the relief on EMI?

There are two parts to a personal loan – the principal amount i.e. the principal amount and the interest on this principal amount i.e. the interest rate. You have to pay them in installments or EMI (Equated Monthly Installments). If you are taking a loan then calculate how much EMI you will have to pay every month. Some banks or NBFCs give you the option of flexible EMI along with the standard EMI amount. Under standard EMI, you pay a fixed instalment every month. Whereas in Flexible EMI, you start with a lower instalment and gradually increase it.

4. What are the terms and conditions of loan repayment?

Before repaying the personal loan, you should also check the terms and conditions of repaying the loan amount before the completion of tenure i.e. loan prepayment. Many banks or NBFCs impose penalties on the prepayment of loans. That is, you have to pay a penalty if you repay the loan money before the completion of the loan period, this happens because the bank is getting interest every month by giving you the loan, if you repay the loan early, then this money stops coming. Before getting the loan issued, you can find out whether you will have to pay any penalty if you want to repay the loan prematurely.

5. Track record of the bank

It is also important to check the track record of banks. You should first check the track record of the lender, how long it has been in the market, how strong it is, and what has been the experience of the customers. Personal loans can fulfil many of your needs and are now available for various planned and unplanned needs, so you should think carefully about the above-mentioned points before applying for it.