A personal loan is one of the best ways to fuel a destabilised cash flow, especially in times of a crisis. Borrowing money from friends and family may not incur interests. Still, it’s not always the best option. Sometimes they are unable to send the amount you need. Hence, you have to suffer from the losses.
Whether it is a pending fee for higher education, extra expenses, home renovation or an urgent travel requirement, a personal loan can be of great help. In case you need an urgent amount for some health treatment you can avail for a Personal Loan for Emergency. But before you apply for a personal loan, there are a few things you should know.
Things to Know Before You Apply for a Emergency Loan:
- Arriving at a Loan Amount: Always remember only to borrow money which is needed. This is true for all loans, but mostly for personal loans because of its high-interest rate. Make a list of all your needs and decide which of them need to be fuelled by a personal loan. If the money is sitting in your account, you will be paying interest for more than you need. So, to save yourself from unnecessary losses, it’s best to only apply for a personal loan amount you require.
- Eligibility and Credit Score: A personal loan is quick in disbursal and processing, provided you meet all the eligibility requirements. The lender will verify your residential stability as well as your employment stability to assess their liability. If you are a self-employed individual, you will have to show proof of a steady income and regular tax returns. But the most crucial eligibility factor is your credit score. The credit bureau decides your credit score or your CIBIL score by analysing your credit history. If you have been making timely and regular payments on your past loans as well as your credit cards, your credit score will be high. A high credit score allows you to choose a high loan amount as well as a low-interest rate.
- Tenure: Lenders have a varying term for personal loans. A shorter personal loan will make you pay a more considerable amount as EMIs. But a longer tenure will accrue more interest. So, it’s always better to cut your monthly expenses a little and choose a shorter tenure.
- EMI: Your monthly EMIs should be paid regularly and timely. Missing a single payment can bring down your credit score by a lot. So, check your monthly payments with a personal loan EMI calculator and decide your loan amount and tenure based on this factor.
- Interest Rate: Interest rates also vary with different lenders. While some lenders may offer you a fixed interest rate, some provide the option for a floating interest rate. Your personal loan interest rate is also subject to your eligibility and CIBIL score. So, choose a lender who offers you the best interest rates.
- Prepayment: You might take a personal loan for a temporary shortage of funds. But if you come across some money during your loan tenure, consider prepaying your loan. Prepayment saves you in interests as well as shortens the tenure of your personal loan. However, always check if your lender offers you a prepayment option and if they have a prepayment fee.
- Processing time: Any type of loan takes its own processing time. You may require a personal loan for an emergency, but the processing time of a personal loan may not allow you to do so. So, always apply earlier than your deadline or choose a lender who offers you quick processing.
- Other Loan Options: Personal loans are great, but have a high-interest rate. You can choose other options such as a top-up on your home loan, loan against property or a gold loan.
Multiple lenders offer various personal loan schemes so that you can borrow according to your needs and within your comfort.