Things To Keep In Mind When Taking A Personal Loan

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Personal Finance

The increased cost of living and diminished salaries has become a problem amongst most of the people these days. The necessities keep on increasing without a rise in paycheque and it surely becomes difficult to sustain in such a trying environment. Earlier, paycheques were enough to carry out the daily activities as well as various processions including marriages. But, now the time has changed and people look out for loans for buying a property, vehicle or for the expenses related to marriages. Personal loans are thus quite common these days. However, there are a few things you need to keep in mind before deciding on a specific loan agreement and avoid taking such important decisions in a fraction of time. Here are some of the things you should know when taking a personal loan:

  1. Choose The Lender Carefully

The baby step to your loan journey is selecting a proper lender. In the era of social media marketing, you could come across a variety of advertisements to lure the audience by depicting the lowest of interest prices. Unfortunately, these prices are never accurate and you should totally avoid such advertisements or even text messages. Although it is possible to say YES to a bank in a jiffy yet do your own market research, talk to people, visit few banks and get to know their plans and decide carefully.

  1. Have A Look At The Interest Rates

So, now you have found the right plan from a reputed bank then your next step should be to calculate the interest rate yourself. The bank shows you the EMI’s based on the flat rates which never show you the actual cost of the loan. Flat rate is a misleading metric and should never be considered. Instead, calculate the interest on the basis of reducing balance if you are planning to repay the loan with EMI’s. For an easy approach, you can calculate the interest rates and EMI’s easily with the help of a Loan Calculator.

  1. Check Other Charges

You might wonder but personal loans also come along with myriad of additional charges. Ideally, the personal loan should only come with a processing fee but some of the other add up a few unnecessary charges to increase the value. Make sure that you thoroughly check it before signing an agreement.

  1. Don’t Confuse Yourself

In order to find the best deal you may visit numerous of banks and bring their exciting offers along with you. It is good to do a market research beforehand to avoid a heartburn later but too many options might confuse you to select the one suitable for you. Keep in mind that too many attempts at approaching a bank affect your credit score. So, ferret out some 2-3 best options and select the right one for you.

  1. Get To Know About The Foreclosures Limits

It is quite possible for you to repay the loan before time. The RBI recently has excluded home loans from the prepayment penalties. However, you need to check about the other options in order to avoid unnecessary penalties. If you are sure that you will be able to pay the loan before the scheduled time then select a loan with the lowest foreclosure charges.

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