Taking a personal loan can be a good idea when you urgently require funds. However, before you take the loan, there are certain things you need to be careful about. Being cautious at this stage helps you to get the best loan at the best rate. Read on to know more.
Table of Contents
Type of loan
There are different types of personal loans that you can opt for. These include wedding loans, salary advance loans, home renovation loans, education loans, etc. While they are all essentially the same loan and the lender never asks the purpose when giving the loan, the categories help you to make a plan. For example, if you need INR 2 lakhs to pay for your wedding, take it as a wedding loan so that you can organise the overheads accordingly and use the money in a proper and effective way. So before you take a short term personal loan, be very sure of why you are taking the loan and what type of a short term loan it is.
Interest rates
A personal loan is an unsecured loan. As a result, the interest rates are not fixed. This makes it tricky for you to get the loan at a good rate if you are not cautious. You have to do your research and see which lender offers the best rate of interest. If your preferred lender offers to give you the loan at a very high rate of interest, you should compare some other options and see the best rate at which the loan is available to you.
Loan volume
The next and a very crucial point to consider is the loan volume. The short term personal loans are available for an amount as less as INR 1000 or as high as INR 5 lakhs. You need to see how much you need. Calculate the needs and then apply for an appropriate amount. If the loan is too large, you will end up paying a larger overall interest amount also and the loan tenure will unnecessarily drag for a longer time. So do the math and borrow what is needed.
Tenure
The next important factor to consider is the loan tenure. The interest rate of the short term personal loan depends on the tenure as well. When the tenure is too long, the lender associates a higher degree of risk with the loan and hence increases the interest rate. This is why you should choose the loan tenure with care and try to clear the due at the earliest.
Repayment options
You need to opt for a suitable EMI scheme. Your aim should obviously be to clear the loan as soon as possible. However, do not opt for an unreasonable EMI option. If the volume of each EMI is too high, you may not be able to afford to pay it. On the other hand, if the EMIs are too relaxed, your loan will drag on for a longer period of time. It is ideal for you to find a balance and repay the loan in a comfortable and affordable manner.
Creditworthiness
The next interest factor to remember is your credit score. The credit score plays a very crucial role here. If your credit score is high, you will get the loan at a better rate of interest and vice-versa. Be very sure of what your own credit score is before you make a personal loan application. This will allow you to understand the loan structure better and you can also negotiate the interest rates if needed.
Consider the NBFCs
Banks aren’t your only option when it comes to applying for a short term personal loan. You can very well consider taking the loan from an NBFC. These lenders are more customer-friendly and offer instant, paperless, digital loans that make the process of getting the loan faster and easier. You can download the app of a trusted fintech company and make an application right now.
Need of the loan
And last but not the least, you should evaluate the need for the loan. Just because the money is available, do not go for it. Evaluate your needs and see the intensity of the requirement. If it is storing enough, do not hesitate even for a minute and apply for a short term personal loan right away.
If you are mindful of these factors when taking a short term personal loan, you will not end up making any financial blunder. You can get the loan and use it effectively. Thereafter, you can choose a good EMI scheme and repay the loan with ease.
In conclusion
As you can clearly see from the points mentioned above, a personal loan is helpful but to help yourself, you need to be very cautious before you apply for the loan. You need to apply from a good lender and only borrow as much as you need. Follow the guidelines mentioned above and you will surely be able to get the maximum value out of your short term personal loan. If you want to know more about such loans and how to apply for them, visit https://navi.com/blog/apply-for-short-term-loans/.
