4 Things to Watch Out for When Taking an Instant Loan Online

 Today, a personal loan has become the go-to source of extra funds for anyone facing an emergency, especially the salaried class. Thanks to easy access and straightforward loan applications, many people seek out personal loans when they want funds quickly and easily. Apart from traditional banks, there are alternate lenders (like NBFCs and FinTech players) that you can approach for instant loan approvals. The loan application process will take only a few hours. If your application is approved, you will receive the funds directly in your bank account. Having listed all the benefits of a personal loan, you cannot avail of a loan blindly. Here are four things you need to check while taking an instant loan online:

1.The Purpose of Your Loan

No matter how easy or convenient it may be to get an instant loan online, you always have to remember that it is a liability that carries interest. You must only take out a personal loan if and when you need it for essential purposes. If you're short of cash for vehicle repairs, home renovation, essential purchases, then applying for a personal loan is understandable. But if it’s for the latest iPhone or a vacation, you may want to hold off. Even with a reasonable interest rate, your loan EMIs will have a considerable impact on your monthly budget, thus limiting funds for other expenses.

2.Your Credit Score

For most personal loan providers, a credit score of 750 or above increases one’s chances of instant loan approval. Are you aware of your correct credit score when you apply for a personal loan? If not, you must. You should also be mindful of your lender's minimum requirements w.r.t your credit score. It will tell you if you're eligible for a personal loan from them in the first place. Your credit score factors in your repayment history, credit utilization and credit mix, among other parameters. If you feel that your score isn't what it should be, you can always verify it yourself.

3.Your Monthly EMI Burden

As mentioned in the first point, even if your loan provider offers you a low interest rate, your monthly EMI burden will considerably impact your budget. It will be another cash outflow that you could've saved up or used to take care of other monthly expenses. As a general rule, all your personal loan EMIs put together shouldn’t exceed more than 15% of your monthly salary. If it does, chances are your financial burden will increase, making it difficult for you to meet your financial commitments. Most lenders have a personal loan calculator that can tell you what your loan EMIs will look like. And always opt for a shorter tenure as it helps you clear your loan quicker.

4.Terms and Conditions

Before signing on the dotted line, you should study the essentials like your principal amount, interest rate, loan tenure, monthly EMIs, and prepayment charges. Don’t be overwhelmed by the small print or legal jargon, and read through the terms and conditions patiently. This will help you avoid any unpleasant surprises later.

Wrap Up

Even though it’s easy to get an instant money loan online, the four points mentioned above act as a necessary reminder so that you make an informed decision while taking out a loan. Always remember to comparison shop for the best loan offers across several lenders before making your decision.


Popular posts from this blog

All You Need to Know About Unsecured Business Loans

Business loans are sanctioned to existing business owners or budding entrepreneurs looking to start their own business. The business loan amount helps them get their idea off the ground. Existing business owners can use the funds to take care business expenses. The loan amount includes the principal amount which is paid with interest in monthly installments. How affordable/reliable is a business loan? Can you, as a business owner honour your installments on time? Other than loans from banks and NBFCs, you can get personal loans for business from FinTech lenders as well. In this article, we discuss business loans in detail. Business loans are broadly categorized into two types - secured business loans and unsecured business loans. What is an Unsecured Business Loan? The main difference between secured and unsecured business loans is that the latter requires the you to offer collateral while an unsecured loan does not require you to pledge any security. For a lender, secured business lo...
Read more

3 Advantages of Consolidating Debt Using a Personal Loan

Whenever you’re faced with a financial emergency, taking out an instant personal loan is sure to be among the top choices that you would usually consider, in terms of coming up with the required funds. This is primarily due to the convenience they offer, from the reduced TAT and loan disbursal time, to the minimal documentation required. Today, it is very easy to get an instant personal loan, owing to the vast number of banks, NBFCs, and FinTech companies that provide them. Whether you need a personal loan in Bangalore, or a personal loan in Chennai, you can get one in a matter of minutes.  While it is always a good idea to borrow only how much you require, it may so happen that you end up taking a number of such personal loans in quick succession. In such cases, your financial goals are sure to take a hit, because a lot of debt accumulation has now taken place. While keeping track of numerous EMI payments can be tough, there is an option that can make your life easier – con...
Read more

Tips to Get a Personal Loan with Low Credit

If you’ve ever borrowed a personal loan before, you’ll know exactly how important your credit score is for your personal loan’s approval. Your credit score is the gold standard against which all lenders across the country evaluate your loan approval. They use this to decide how risky it would be to sanction your loan. If you have a high credit score, you’d be a low-risk applicant for your lender. If your credit score is low, you’d most probably represent a high-risk proposition for your lender. Your credit score is a three-digit number that illustrates how financially responsible you are. It summarises how much credit you’ve availed of until now, your repayment behaviour, and your credit history. By now, you must be thinking that applicants with a low credit score cannot get a personal loan . But that’s not true. Here are four tips you can try to get a personal loan despite a low credit score: 1.Prove That You Have Good Repayment Capacity When it comes to getting a low credit personal ...
Read more