Over the last few years, loan taking has been made easy for people due to its digital presence. Loan apps have especially gained a lot of traction. The Fullerton India instant personal loan app for salaried borrowers, i.e. Fullerton India InstaLoan, is the perfect example of the same. Such new popularity around loan apps can be attributed to their user-friendly interface.
There is a surplus of loans available in the market today, and picking one can be overwhelming. As challenging as it may be, narrowing it down to one or two lenders is essential because not all of them are trustworthy. It requires borrowers to pay close attention to the terms of the loan. The following are a few things to take into consideration when taking a personal loan.
5 Factors to Consider While Choosing the Right Personal Loan:
- High Origination Fees
When financing a personal loan, some lenders and financial institutions might charge an origination fee. This fee is usually a fixed amount that needs to be paid once your application is sent in or verified. Although this charge is not out of the ordinary, borrowers must be wary of how high this fee is. If you are proposed with an origination fee that amounts to a significant percentage of your loan amount, it is a red flag customers must watch out for.
- Short Repayment Span
While it is advised to repay loans as soon as possible and be debt-free, tight repayment deadlines are not ideal. A short repayment span means there are a lesser number of instalments, therefore, making EMIs higher. Very often, borrowers tend to face financial crunches over their loan tenure, which set them back. As a result of these deadlines, you may fall into the trap of more debt. Furthermore, a default in repayment reflects poorly on your credit score and will discourage lenders from extending your credit in the future.
- Interest Rate Calculation
While some apps offer regular personal loans with annual interest calculation, some may offer personal loan interest rates on a monthly basis. Such loans are known as salary loans. There are a few lenders who offer payday loans too, which accrue interest per day. But the most cost-effective ones are the ones that offer an annual interest rate.
- Loan Tenure and Amount
Before applying for a personal loan, the most important factor to account for is the amount of loan you need to borrow. With the help of a personal loan EMI calculator, you can input various tenures along with the desired loan amount to calculate the EMI obligation. Once you calculate the amount using a personal loan EMI calculator, you can easily compare different lendersâ€™ loan offers and evaluate them against your findings. It is a smart idea to reach a budget-friendly loan offer. You can also determine your likely personal loan interest rate with the online calculator offered by your desired lender.
- Credit Score
Your credit score is a major determinant of your eligibility for a personal loan. A credit score or CIBIL score is a 3-digit number ranging from 300 to 900 and reflects the borrowerâ€™s creditworthiness. It mirrors your overall financial health regarding disposable income, existing loans, borrowing and repayment history.
The higher your CIBIL score, the more likely you are to get your personal loan approved. In addition to this, the sanctioned loan amount and the loan terms (interest rate and EMI) depend greatly on your CIBIL score. A CIBIL score over 750 is considered excellent for taking a personal loan with favourable terms.
Taking all these factors into consideration is essential when selecting a lender for personal loans. Commit to a lender that offers competitive interest rates and a flexible repayment period to secure your financial health in the long run.
This article is created in association with Fullerton India.