Personal loans are basically unsecured loans that are simpler to procure owing to their minimal documentation and lack of guarantor or security. Common reasons for an availing personal loan are –
∙ Consolidation of debt
∙ Wedding or various other social functions in the family
∙ Medical exigency for family or self
∙ Repaying credit card bills
∙ For financing vacations
∙ Purchasing high-end house appliances
So, whatever your purpose is to avail a personal loan through the offline or online medium, there are specific tips that can assist you in figuring out the product that best suits you.
Loan amount
Before taking any action on your decision to take up a personal loan, one of the crucial parameters involves determining the loan proceed that you want to borrow. Based on your need for funds, it is necessary that you fix the required loan amount and then move ahead to compute the EMI obligation based on the loan proceed and the repayment tenure for which you availed the loan. Comparing the loan offered by distinct lenders will allow you to settle for a budget-friendly personal loan. Suppose, after all the comparisons, you selected ICICI personal loan. After this, you must proceed in the following way.
If you have zeroed on an ICICI personal loan to avail of the loan proceeds for your immediate need, then you must consider computing the loan EMI using the online ICICI personal loan EMI calculator. On the calculator, input your required loan amount, expected ICICI personal loan interest rates and the preferred repayment tenure. Adjust the inputted details as per your preference to derive an EMI that is fit your budget.
Loan tenure
When you avail of a loan, it is recommended you repay the loan as soon as possible. This said, lenders that offer a short repayment span would naturally require a higher EMI due to the lesser number of instalments. Defaulting on your loan repayment can leave an extremely bad impression on your credit profile and credit score, discouraging lenders from disbursing or sanctioning loans to you in the upcoming times. So, while you might be looking to get debt free, it is necessary to gauge your capacity to repay and go for the repayment tenure that works for you.
Lenders
Personal loan happens to be a common product offered by financial institutions and banks. More often, you may be flooded with text messages and calls offering personal loans at extremely attractive rates as well as conditions. With splendid options to select from, choosing the correct lender can be extremely overwhelming. With a plethora of choices to select from, choosing the correct lender can be difficult. In a few cases, it is important that you conduct your due diligence to avoid falling for loan traps or fraudsters.
For an informed decision, using the online aggregator platform is recommended. You can simply compare the different lenders, their terms, conditions and rate of interest, and you will even be notified about the deals that such different lenders provide on the platform. In case you are looking for a long-term loan, you must consider going for an established lender offering favourable terms and conditions.
Credit score
A CIBIL score or credit score is the key indicator of your personal loan eligibility. Before you move ahead with the step to take up a personal loan, it is crucial that you review your credit score or CIBIL score. While holding a higher credit score will enhance your chances of availing yourself of personal loan approval, your credit score even has a major impact on your loan proceed that’s sanctioned involving the loan terms and conditions like EMIs and rate of interest.
A credit score shows your thorough financial health and endows the lender with a good understanding of your debt repayment potential. A credit score of over 750 is looked upon as excellent to get your personal loan approved at favourable terms.
Rate of interest
You might have numerous lenders that approach you with marginally low and attractive interest rates. As alluring as the offer may be, remember that when you go for such a low rate of interest loan, you might end up repaying more owing to various other unreasonable conditions and terms linked with a loan.
Conducting a comprehensive study and in-depth comparison of loan rates of interest of distinct lenders is crucial before you proceed to avail of a personal loan. Another parameter that you must keep in mind is how the rate of interest is computed. The ICICI Personal Loan interest rate is computed uses the reducing balance method and is looked upon as ideal in many scenarios.
EMI computations
Before you avail of a loan, it is necessary that you are accustomed to the procedure of EMI computation. Knowing it will assist you in understanding your potential to repay your loan on time. With choices like advanced EMI and no-cost EMI in the market, having clarity on how such EMIs are computed is crucial to making sure that you avoid repaying more than your capacity.
Origination fees
Few lenders levy origination fees on personal loans. The origination fee is nothing but a fixed amount that requires being paid once the personal loan application is sent across to you by the lender or when your loan application is accepted. Being aware of the rates at which the origination charge is levied by distinct lenders will assist you in making the correct decision and even steer clear of the high origination fee.
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Prepayment and foreclosure fees
The next set of charges that you must be aware of is the prepayment and foreclosure charges. Such charges come into the picture if you plan to settle the loan before its repayment tenure ends. While few of the banks might choose not to levy any foreclosure charges or prepayment fees, most banks might levy anywhere from 2 per cent and 5 per cent of the balance.
Comparing such fees will assist you in pinning down the lender who is providing the maximum flexibility when it comes to repayments, whether full or partial.
