7 essential things to keep in mind when applying for a personal loan

May 25 2020 03:35 PM
7 essential things to keep in mind when applying for a personal loan

Given how quickly the world of finance has has advanced over the last few years, availing of a fund when you need them is easier than ever. Unsecured personal loans, for instance, can be availed completely online – digitally, without even leaving your home. 

And lenders are offering these loans with a host of attractive features – competitive interest rates, flexible tenors and more. 

But no matter how convenient a loan may seem, it is critical that you remember to be financially responsible with the money you borrow. And being educated about the basics of finance can go a long way in ensuring you take the right decisions. Why are you borrowing the money? How much of it do you need? And will you be able to repay the loan over the duration of the tenor? It is important you understand these questions and the implications they may have on your financial health.

To help you with this, here are seven essential things to keep in mind before you apply for a personal loan.

Take note of the lender’s eligibility criteria

A lender’s personal loan eligibility criteria is the first and most important element to know before applying. These are usually easy to qualify for and relate to your age, citizenship, city of residence, employment and income. However, this may not be the case for all lenders and so, do your due diligence and check. Failing to do so can lead to complications in the application, which either result in unnecessary delays at best or an outright rejection at worst. 

Ensure you gather all the required documentation beforehand

To successfully apply for a personal loan, you need to prove your eligibility with documentation. Most lenders will mention the list of documents required and it is a good idea to have them ready beforehand to minimise delays in processing. However, to apply with less paperwork, choose lenders who offer personal loans after verifying only your basic documents. These include your passport photographs, basic KYC documents and your bank account statement of the last 3 months. 

Know the application process

The application process for a personal loan differs with lenders as some have only offline provisions, while others have both. For instance, Bajaj Finserv offers customers an offline and an online application process – the latter taking up only 4 simple steps. 

Step 1: Enter your personal details on the online application form
Step 2: Enter the loan particulars, such as amount and tenor
Step 3: Submit your documents and await approval 
Step 4: Get funds in your account in just a few hours

Be on the lookout for lender-specific offers. Example, Bajaj Finserv offers existing customers the option of instant funding via a pre-approved offer. Here, you simply need to verify your details on a pre-filled form and authorise disbursal to your bank account. This is a 100% online provision that requires no documentation and can be completed in a few clicks. Knowing these options can help you apply for a personal loan conveniently and quickly. 

Read up about interest rates, fees and charges

Knowing all you can about the personal loan offering is vital to borrowing smartly and this includes inquiring about the rate of interest on personal loan and the fees in the fine print. It isn’t uncommon to be lured in with a teaser only to be presented with a deal that is much costlier in the long run. To avoid this, you should start by comparing the interest rate with a few other offerings in the market, and then move on to the loan charges. These typically include a processing fee, bounce charges, penal interest rates, and any other such fees. Take note of the fact that these are usually percentages and can equate to a hefty sum. 

Check repayment features 

Besides the sanction and the interest rate, another important element to note is the tenor offered on a personal loan. Here, you should ensure that the tenor available is suitable to your capabilities. This way, if you’re looking to reduce your EMI burden, you can always opt for a long tenor. 

Be aware of the disbursal terms and conditions

Before applying, you should also inquire about any disbursal terms that may be due. Further, it is also important to check the disbursal time post approval. This way, you can identify a personal loan that gives you quick access to funds in emergencies. 

Check for the availability of special features or benefits

A good example of a beneficial personal loan feature is the Flexi Hybrid Personal Loan variant, which allows you to borrow from your sanction in parts, as per your need, and as many times as you’d like. Here, the interest is charged only on the amount you utilise and not the entire sanction, thus giving you added control over your loan. Such features can help you repay more affordably, so ensure you look out for them before applying. 

Follow this checklist and get a detailed understanding of your unsecured loans before applying for one. Make sure you compare lenders and make an informed choice. 

You may find that the Bajaj Finserv Personal Loan is one that stands out across multiple features. It offers an online application process, is easy to avail, and you can get the money you need in an instant. 

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