Technological advancements and applications for personal loans have made it convenient for lenders to reach out to borrowers and offer them instant personal loans. These are the reasons that made the loan application process much easier, as you no longer have to wait in long queues for hours to get approval. In fact, you can get the loan within a few hours or a day. It’s no surprise that personal loans are becoming increasingly popular in India.
Moreover, personal loans also serve as an alternative to credit cards, as they provide funds for big purchases while saving on interest. However, it’s important to consider all important factors to increase your chances of getting approved for the loan without rejection. Therefore this article will discuss the relevant factors one should consider before applying for an instant personal loan.
Have a Financial Objective and Planning
Before applying for a loan, you must have a clear objective or purpose for taking a personal loan. Also, it is important to have a proper plan for repayment to avoid an adverse effect on your CIBIL score. Although instant loan applications are easy to access, many borrowers’ loan applications get rejected due to the perception that these loans are taken for granted due to easy access. Furthermore, it is important to be ready with your required personal loan documents to meet the eligibility criteria.
Five Ways to get the Best Deals and Avoiding Rejections
1. Borrow the Amount That You Are Capable of Repaying
While Borrowing, it is important to remember that your final EMI will be half of your monthly income. Therefore it is better to determine your EMI in advance using an EMI calculator for better planning and management of repayment. Considering this tip, you will be able to decide the loan amount that meets your financial requirements.
2. Choose Short-Term Loans
The tenure of the loan affects the interest rate incurred on the principal amount. And opting for a long-term loan, you end up paying a higher interest rate, as long-tenure is considered to have more risk over the lender. At the same time, short-term loans ensure repayment and are considered less risky by lenders. Therefore, it is better to opt for a short-term personal instant loan to secure a loan with lower interest rates.
3. Repay Your Dues Timely
Borrowing and loan repayment is a long process; you must be disciplined with this long process and must pay your dues timely to avoid high penalties. Besides heavy fines and charges, missing a couple of your installments can adversely affect your credit score and reduces your eligibility to get loans in the future.
4. Avoid Taking Loans Unnecessarily
Before taking out a loan, having a clear financial goal or purpose is crucial. It’s best to avoid taking loans for hasty purchases because this can lead to unnecessary debt and high-interest rates.
5. Try to Avail of Tax Benefits
Government offers tax benefits on personal loans for home renovation, education costs, etc.; in such a situation, you can deduct the interest from your taxable income.
Conclusion
Personal loans are the best alternative to credit cards. However, like any other financing product, they also require proper planning and management. Besides planning, compare the cost and interest rates of different applications by inquiring about the lender’s website to get a loan that best suits your requirements.