A personal loan is a loan that one can borrow for various reasons, these are typically unsecured loans and requires minimal documents and no collaterals. However, the amount of loan that you are eligible for will depend on your credit score history. The amount borrowed as a personal loan needs to be repaid with a fixed interest rate over the loan tenure. Personal loans are one of the fastest, easiest, and quite flexible loan option and therefore it attracts a lot of borrowers. There are many reasons why you might want to take a personal loan, it can be for remodelling the house, vacation, planning a wedding, personal emergency, or any planned or unplanned purchase. Let’s look at some of the ways that can help you get a hassle-free personal loan.
§ Credit Score: A Credit Score is a significant indicator of your creditworthiness. Lender’s decision to approve a loan relies heavily on this parameter. Hence it is essential to maintain a good credit score. A good credit score poses many advantages like improving your chances of loan approval and better interest rates, whereas a bad credit score does the exact opposite
§ Repayment plan: It’s a smart idea to plan your repayment of the loan as it will avoid any late payment and penalty. While planning the repayment, keep in mind the loan tenure, EMI deadlines, and set reminders. Check if the lender allows for early repayment and if it does, do they charge any fee? Ensure that this fee is not very high
§ Organize Documents: Keep all the necessary documents organized and ready. Different lenders can ask for a different set of documents, you need to make it easy for yourself and keep documents like Aadhar Card, PAN card, payslip, etc ready. The earlier you submit your document, the faster you will learn about your available option
§ Check Eligibility: Every lender will have their own set of criteria to decide the eligibility. But broadly speaking, parameters like age, monthly fixed income, credit history, credit score, other financial obligations, etc. will be the deciding factors
§ Terms and Conditions: There are certain terms and conditions attached to every loan, be it personal or any other type. A borrower has to abide by these TnCs till he/she clears the borrowed loan. Violating the terms can make the borrower pay a penalty too. So read these TnCs carefully and choose the loan that fits you the best
While these prerequisites will set you up for a successful and hassle-free disbursal of a personal loan, you also need to be cautious and aware of fraudulent unauthorized lending platforms. RBI has cautioned the public against these unauthorized platforms. These platforms charge a higher interest rate, hidden charges, and have obnoxious and imperious recovery methods.
So to safeguard your interest, what should you look for before applying for an instant personal loan on the app? Mr. Madhusudan Ekambaram, Co-Founder & CEO, KreditBee and Co-Founder, FACE (Fintech Association for Consumer Empowerment) advises that “Firstly you should look at the legitimacy of the NBFC that is backing the lending platform since many platforms are lending online today without a proper NBFC backing in the first place. Secondly, one should look at the feedback about the lending platform on digital media, which can give a good understanding of the consumer sentiment about the platform. Thirdly, they should get a clear view of the interest rates and other fees on distribution platform listings during the loan application process, as well as getting explicit information & documentation around the loan, included but not limited to loan sanction letter, agreement, repayment schedule, GST certificate, and all charges that the user has to incur to avail the service. Consumers should additionally have a clear look at the website of the platform, and check on their policies, code of conduct, and customer complaint handling mechanism.”
Another thing that one should be cautious of is data theft. Data theft is the most common form of cybercrime used for financial fraud. You need to become more aware and cautious of not giving out your personal details on unverified websites or anyone on call posing as a bank or financial institution employee. Ensure that you are working with a reliable and trustworthy lending institution that follows high-security standards like KreditBee. KreditBee does Information Security Audits very regularly with consulting firms to ensure that any inadvertent misses are taken care of in a very agile manner.
When you finalize the lender, ensure that you compare various banks and NBFCs and then choose the one that suits your needs the best. Ensure to check for interest rates, prepayment charges, loan tenure, any other charges, etc. before applying for a personal loan.