3 Important Tips To Get Your First Personal Loan
A personal loan can bail you out of tough financial situations, especially when secured lines of credit are not an option. The ease and speed with which one receives approval on such loans are primary reasons for their popularity. Nevertheless, make sure you have a proper understanding of the personal loan application process beforehand. Such knowledge aids in opting for the best option while also limiting the financial burden during repayment.
Navi offers hassle-free personal loans via a paperless application process. All you need to do is download the Navi app on your smart devices and receive the funds in a matter of minutes. However, before submitting such an application, consider the reasons for availing the credit.
Why Should You Avail a Personal Loan?
Personal loans do not require borrowers to pledge any asset as collateral. Thus, it is the first option for many in case of emergency financial needs. Here are some valid reasons when you can avail such a form of credit:
- For debt consolidation
You can consider an online personal loan application to consolidate multiple dues. If you are repaying several lines of credit at once, debt consolidation is a simple solution. With the personal loan amount, you can foreclose your other dues. After that, you only need to keep track of one EMI instead of several payments.
- To improve your credit score
Your CIBIL score is a true reflection of your creditworthiness, and improving the same can unlock better credit offers. A personal loan application can help increase your score significantly with proper financial planning. Opting for small loans and repaying them on time improves this score over time.
- To fund your wedding expenses
Wedding ceremonies are a costly affair in India, with celebrations lasting over several days. Moreover, some individuals prefer destination weddings, which can drive up the cost further. Bank loan application can reduce the burden on one’s savings at such a time without compromising on the event itself.
Other popular reasons to acquire such a loan include funding emergency medical expenses, higher education expenses, foreign vacation expenses, and much more. Nevertheless, before applying, make sure you consider some of the factors mentioned below.
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Tips for First-time Borrowers
Individuals looking to avail a personal for the first time should remember the following aspects:
- Good credit score equals better terms
Most lenders seek personal loan applications from people with a credit score of 750 or more. Higher scores allow borrowers to get lower interest rates and can allow them to borrow more. Therefore, improving your credit score beforehand is vital for enjoying the best personal loan option.
- Determine why and how much you need to borrow
Rather than borrowing the maximum sum on offer, you should consider your own needs. Keep in mind that opting for higher principal amounts will result in higher EMIs. The best course of action is to have a clear purpose before sending out an application.
- Choose your lender wisely
A major part of your loan experience depends on the lender you pick. Only the most reputed lenders offer transparency right at the onset with no hidden costs. The choice of a financial institution often determines the interest percentage on your loan as well. Compare the various available options and pick a lender after careful consideration.
Lastly, never avail of such a loan blindly. You should calculate your monthly EMIs beforehand to avoid financial difficulties during the repayment stage. Read on to know more about such calculations.
Calculating Personal Loan EMIs
Before availing of a personal loan, you have to understand your interest and EMI liabilities. The formula to calculate EMI is given below:
EMI = P x R x (1+R)^N / [(1+R)^N-1]
- P = Loan principal
- R = Monthly rate of interest
- N = Loan tenure in months
Do not let this complicated-looking formula put you off since lenders provide online EMI calculators for the same purpose. Enter the principal amount, tenure, and interest rate details to receive instant results. Use the Navi personal loan EMI calculator to determine your EMIs and total interest cost on such loans.
Calculate Your Personal Loan EMI
Loan Amount
Rate of Interest (P.a)
%
Loan Tenure (Months)
months
Monthly EMI
0
Total Interest
Total Amount
Checking Personal Loan Eligibility
Checking your eligibility is crucial before initiating the personal loan application procedure. Eligibility calculators can help you understand exactly how much amount you can avail yourself. Additionally, you should know the primary factors that lenders check when determining your eligibility:
- Age: Salaried applicants should be aged between 18 and 60 years, while self-employed individuals should be between 21 and 65 years.
- Income: Every lender has minimum monthly income requirements. Check with your financier to know how much you must earn to avail of a personal loan.
- Credit score: Maintaining a credit score of 750 or more is mandatory when submitting an instant loan application online.
Documents Necessary for Personal Loan Application
After checking eligibility, the next step is to arrange for the documents. Here is all you will need:
- PAN card
- Address and identity proof
- Bank statements of the last 6 months and salary slips (for salaried employees)
- IT returns of the past two years
- Proof of business vintage (for self-employed individuals)
Note that eligibility criteria and the list of documents required vary from one lender to another.
Navi offers attractive interest rates on personal loans, and its digital application procedure is streamlined considerably. Download the Navi app on your phone today and follow the steps mentioned below to apply for a loan:
Step 1: Open the Navi app; navigate to the personal loan section and select the apply option.
Step 2: Fill up the application form online, providing the necessary details.
Step 3: Choose your loan amount and preferred repayment tenure from the available options.
Step 4: Upload the necessary documents.
Step 5: After checking the details a second time, click on submit.
After your fast cash loan application is complete, the lender will verify the information provided by you. Once the details are verified, you’ll receive the funds in your bank account within minutes.
How to Plan Personal Loan Repayment?
The simplest way to ensure hassle-free cash loan repayment is to create a budget. Besides that, here are a few tips you can consider:
- Choose loan tenure wisely: Rather than opting for the shortest tenure, consider how much EMI you are comfortable paying.
- Be mindful of deadlines: Defaulting on your loan can have a serious impact on your credit score. Make sure you mark the deadline for EMI payment on your calendar to avoid missing the same.
- Do not repay multiple loans at the same time: Make sure you only repay the personal loan rather than several other dues at the same time. Otherwise, you might end up under an immense financial burden.
Final Word
Sending out a personal loan application involves planning and proper execution. Reading this write-up should help you navigate through the various steps of such an application process. It should also make repayment simple.
Frequently Asked Questions
Ans: You need to bear monthly EMIs to repay your personal loan. However, if you fail to clear one of these EMIs on the predetermined date, you would need to bear an additional penalty. This amount varies from one lender to another.
Ans: Personal loan interest rates can differ based on the eligibility factors of an applicant. Mostly, your age, income, credit score, and employment determine the risk associated and interest rate. Additionally, your present relationship with a lending institution can also affect such rates.
Ans: A co-borrower can improve your personal loan eligibility if he/she has a decent credit score. In the case of co-applicants, lenders consider both your income and that of your co-borrower before setting loan terms. Thus, the risk is lower for lenders when two people apply for the same loan.
Ans: Low CIBIL scores can hamper your chances of acquiring the best terms on personal loans. If you apply for such a loan with a low credit score, you will need to bear higher interest charges. Additionally, banks offer limited principal amounts in such cases.
Ans: A hard inquiry refers to a check that lenders initiate on your CIBIL score after you submit a loan application. Such an inquiry not only reveals your credit score but it also discloses additional markers related to your creditworthiness. Several hard inquiries within a short period can hamper your credit scores as well.
Before you go…
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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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