A personal loan can come handy at the time of financial press as they are fast in processing and doesn't require any collateral. These are the biggest draws which make a personal loan best choice for many of us. But the other side of the coin says the facilities which we are enjoying with personal loans come at a sky-high price. A personal loan interest rate is higher than other secured loans. So one must look into it before leaping .
#Tip 1: Do a Smart Comparison One may think that the interest rates on a personal loan are uniform for all lenders but that is not true at all. The interest rates vary lender to lender and applicant to applicant. One must do a smart comparison well in advance to spot out the lender with the best personal loan rates. Even one may experience a difference in interest rates depending on credit score. # Tip 2: Examine Other Options Though there is a perception that personal loans are the best for urgent monetary needs, but these are not the only option for getting an urgent fund. If one feels that he needs a small amount of loan which he will be able to repay within next two or three months then he can even go for a credit card too. Or if there are any valuables like gold, one can go for a gold loan which will be cheaper than a personal loan. #Tip 3: Do Not Over-Shop One must decide the loan amount according to the need but not according to the eligibility. It is advised not to apply for a high amount only because you are eligible for it. Borrowing money may be a simple task but one should never forget that the borrowed amount must be returned to the lender along with the applicable interest. #Tip 4: Read the Fine Print Any kinds of loan whether personal or not comes with a set of terms and conditions which one has to follow until the loan is entirely repaid. Before signing any agreement one must read the terms and conditions meticulously. Signing an agreement without knowing what exactly it bears may land you in hot water without an alarm. #Tip 5: Use the Money Productively Every loan is taken with some purpose. One must not go astray and stick to its real purpose. It may happen that having an ample amount of money in the bank account tempts one to use it in a relaxing way. One must be cautious about the use of the borrowed money and use it in the most productive way. #Tip 6: Negotiate For the Best Rate As mentioned above, the personal loan interest rates depend on lender as well as applicant too. An applicant with excellent credit score can avail a loan at a comparatively lower interest rate. If you are also one with an appreciable interest rate, you can even bargain for a better interest rate. One must apply for a personal loan only if he gets the best possible rate on the market. #Tip 7: Think of the consequences of not repaying the loan on time Either it may be a personal loan or any other kind of loan, they are subject to repay by monthly installments which are commonly known as EMI (Equated Monthly Installments). One must pay the EMI on the pre-fixed time every month until the end of the tenure. Unable to pay EMI may lead to paying penalty or even legal actions too. One must be aware of such penalties or other consequences of not paying EMIs on time. #Tip 8: Credit History This is the primary parameter to check the creditworthiness of an applicant. One must check his credit score prior to applying for the loan. A loan application with a low credit score not only be replied with a rejection, it will affect adversely on the credit score too. #Tip 9: Need or Greed This point is highlighted here only to make an applicant cautious about the purpose of the loan. A loan must be taken only for a genuine reason. Applying for a loan for less meaningful reasons may result in compromising in essential items in times to come. #Tip 10: Talk to Friends and Family This point is mentioned at the end but holds a lot of value. Our friend and family can stand as the best help at the bad time whether financial or emotional. One must approach their family and friends before reaching any professional lender. If you are able to get a loan from your near ones, it must be cheaper than the professional ones and can enjoy much flexibility too.
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