In recent years online Personal Loans have become famous for those needing quick and easy financial assistance. The convenience of applying for a loan online has made it a go-to option for many. However, it is crucial to be smart when it comes to applying for online personal loans in India, as there are many scams and predatory lenders. This article will provide a comprehensive guide on how to be smart while applying for online personal loans in India.
What are Online Personal Loans?
An online Personal Loan is a type of loan that lenders offer. These loans can be used for various purposes, such as debt consolidation, home improvement, medical expenses, or other personal expenses. The application is made online, and the loan amount is disbursed directly into the borrower’s bank account upon approval. The loan repayment is made through Equated Monthly Instalments (EMIs) during the tenure of the loan.
Eligibility for a Personal Loan
Before applying for an online Personal loan, it is essential to check your eligibility. The eligibility for a personal loan may vary from lender to lender, but the general measures include the following:
- Age: You must be at least 21 years old and not more than 60 years old.
- Employment: You must have a stable job or a regular source of income.
- Income: You must meet the minimum income requirement set by the lender, this could change for an applicant depending upon their city.
- Credit Score: A good credit score (700+) is usually required to get approved for a Personal Loan.
Along with the eligibility criteria, one must also keep the documents handy. You must have all the required documents, such as identity proof, address proof, and income proof.
The criteria and the documents required may differ depending upon different variables, so keep an eye out for that.
Tips for Being Smart About Online Personal Loans in India
- Research the lender
Regarding online Personal Loans in India, it is essential to research the lender before applying. Checking if the lender is registered with the Reserve Bank of India (RBI) and has a valid NBFC (Non-Banking Financial Company) license is the first step towards ensuring your safety.
By doing this, you can be sure that the lender is operating legally and following the guidelines set by the regulatory authorities. It is also essential to check the lender’s reputation by reading reviews and testimonials. This will help you understand the experiences of other borrowers and give you an idea of what to expect.
You can also check the lender’s social media pages and online forums to understand the company’s operations. In case you come across any negative feedback or complaints, it is advisable to consider the reasons behind that and, if required, consider a different lender.
2. Compare interest rates
Interest rates on personal loans vary from lender to lender. Comparing the interest rates offered by various lenders before choosing one is crucial. Even a tiny difference in the interest rate can significantly impact your repayment amount.
While comparing interest rates, it is also essential to understand the different types of interest rates lenders offer. For example, fixed and floating rates are two types of interest rates that lenders offer. By understanding the differences between these interest rates, you can choose the one that suits your financial requirements.
3. Read the terms and conditions.
Before applying for a Personal Loan online, it is essential to read the terms and conditions carefully. This will help you understand the loan agreement, including the interest rate, repayment schedule, and other charges.
Checking hidden charges, prepayment penalties, and other fees is also crucial. These hidden fees can make the loan much more expensive than you anticipated. Make sure to clarify any doubts with the lender before signing the agreement.
4. Don’t borrow more than you need
One of the most common mistakes people make when applying for Personal Loans is borrowing more than they need. Unfortunately, borrowing more than you need can result in higher interest charges and extended repayment periods.
Before applying, evaluate your financial situation and determine how much you need. Then, make sure you can repay the loan within the stipulated time. Choosing a loan amount that suits your financial requirements can help you avoid financial stress.
5. Check for prepayment options.
Some lenders allow you to repay the loan without any penalty. This means you can repay the loan amount before the end of the loan tenure without incurring any extra charges. This can help you save money on interest charges and close the loan faster.
If you have extra funds available in the future, consider choosing a lender offering prepayment options.
6. Don’t share your personal information.
While applying for an online Personal Loan, it is crucial to be cautious when sharing your personal information online. Ensure you only share your information with trusted lenders on a secure website.
Ensure the lender’s website has a valid Secure Socket Layer (SSL) certificate. This ensures that any information you share on the website is encrypted and cannot be intercepted by third parties.
Final Words
Online Personal Loans can be a great financial tool for those needing quick and easy financial assistance. However, being smart about these loans is essential. Following the tips above, you can choose a reputable lender, compare interest rates, read the terms and conditions carefully, and borrow what you need. This will help you avoid scams and predatory lenders and make intelligent financial decisions.