Having a proper financial plan to manage all your resources is very significant in today’s life. It helps you in times of exigencies when financial burden is a major hurdle. Financial institutions offer different kinds of loans. These include home loans, personal loans, two-wheeler loans, cash advances, and loans against property. You must weigh the merits and demerits before taking any of these loans and select one that best meets your requirements.
A personal loan refers to a type of unsecured loan for which you do not require any collateral. In addition to that, minimal documentation is required for availing of personal loans. These loans can be used for a variety of financial needs. These include medical emergencies, home renovation, or relocation purposes. So, let’s get you started on the things you must keep in mind before availing such loans.
What are the Things you Should Keep in Mind While Taking a Personal Loan?
You need to keep all the vital things in mind while applying for a personal loan. These include a variety of factors such as the assessment of all costs, interest rates, credit score, and your ability to repay the loan. These factors are discussed below:
- Interest Rates
Different financial institutions offer different interest rates. You must compare and evaluate these interest rates. After comparison, you must select the financial institution which offers the lowest interest rate. It helps in reducing the burden of equated monthly installment (EMI) payments significantly over the years.
- Repayment Ability
This is also a crucial factor that you must keep in mind before availing of a personal loan. You must have a financial plan in place to manage the loan and its EMI payments. You can do this by carefully evaluating your investments and different sources of income during the repayment tenure.
Now, this process has been made easier with the help of a personal loan EMI calculator. You can now enter your loan amount, select the interest rate and tenure for repayment and easily get the amount of EMI payments. You can also readjust the value of loans or interest rates as per your ability to repay the personal loan.
- Credit Score
Every financial institution evaluates your credit score before giving you a personal loan. These credit scores are given by various organisations such as CIBIL. The CIBIL credit scores range between 300-900. The ideal score for availing of personal loans is between 720-750. There are various ways in which you can ensure a good credit score. These include making repayments on time and using the same card for all your repayments. You can further automate your payments which in turn will ensure timely payment of all your dues.
What are the Eligibility Criteria for Availing Personal Loans?
There are various requirements that you must meet to apply for personal loans. Such eligibility criteria are listed below.
Age is the first factor that determines whether or not you can avail of a personal loan. Individuals between the age of 21-60 years are eligible to avail of personal loans.
For salaried individuals, the income must be at least 25,000 per month if you are a resident in Mumbai or Delhi and 20,000 per month in the rest of India to avail of personal loans at Fullerton India. For self-employed individuals, a minimum yearly profit after tax is determined based on the profession or industry of the individual.
For availing of personal loans, you must be a resident citizen of India.
- CIBIL Score
You must have a good credit score to avail of a personal loan. Different financial institutions use different credit scores for evaluating eligibility for personal loans. At Fullerton India, the minimum CIBIL score must be at least 750 to avail a personal loan.
There are numerous benefits that personal loans offer, such as total flexibility on the usage of the loan, no requirement of collateral, and minimum documentation. A good history of timely payments combined with proper repayment ability is the key to ensuring no hindrance while availing such personal loans. It is also imperative for you to evaluate the background of the financial institution from which you are taking personal loans. Therefore, you must carefully evaluate your finances and make a proper plan before taking instant loans.