Personal Loans are a boon when you face a financial emergency, and your savings seem to be insufficient to cover your immediate requirements. You can apply for such a Loan and use it to fund a wedding, renovate your home, pay for a vacation, or cover any other emergencies that arise. However, before you choose a bank and apply for a Loan, here are some factors you should remember:
Personal Loan interest rates play a major role in determining how much would be the overall Loan cost. Hence, you need to compare the interest rates offered by different banks and choose one that suits your budget. Ensure that you opt for a rate that stays constant throughout the entire Loan tenure. This prevents you from worrying about planning your budget each year.
Maintaining a good credit score shows the lender how creditworthy you are and improves your chances of securing a Personal Loan during an emergency. Some lenders also provide pre-approved Personal Loans based on your creditworthiness. This makes the process of applying for the Loan amount easy and the entire corpus gets transferred to your Savings Accounts within minutes of submitting your application.
Besides ensuring that you get the lowest interest rate for the Personal Loan, it is essential that you also consider the other costs when borrowing. For example, processing fees, foreclosure charges, pre-payment charges, etc., are other associated costs. So, make sure that you have a clear picture of the total expenses you will incur before applying for your Loan.
Before you borrow a Loan, you should prepare to repay the Loan. Hence, ensure that you have enough funds to pay the equated monthly instalments at fixed intervals. Some banks also allow you to choose from flexible repayment tenures. This makes sure you repay the Loan easily and that the EMIs are bearable enough to provide ample room for your other needs and wants.
Before applying for a Personal Loan, evaluate the expenses associated with your needs and then decide the final amount you want to borrow.
You can only claim tax deductions under Section 24(b) of the Tax Act, 1961 if you use the Personal Loan for the following reasons:
- to buy or renovate a house
- to purchase assets like gold
- to fund a business expansion
After considering the mentioned points, applying for a Personal Loan is hassle-free. You can do it online and from anywhere in the world using the Banking app. The process is completely paperless and gets done instantly.