Among all types of loans available at banks, the one used mainly by customers is the Personal Loan. This type of personal loan is easy to obtain and you can apply and acquire them at the convenience of the online portal provided by the respective banks or visit the branch in person.
If an individual has any existing loan waiting to be cleared off, taking a personal loan sounds like a financial burden. Often, personal loans are disapproved of because of a high rate of interest and bank complexities. But the rate of interest can be shortened as long as one has a good CIBIL score and is accountable to banks for paying their dues on time.
You can use a personal loan eligibility calculator, which is available online or in a bank itself. This will help you figure out your finances and rule out the possibility of taking a personal loan. Go through the following list to understand how you can manage your additional pending dues with the help of a personal loan:
Taking Loan as per Needs
It is necessary to be particular about how much funds are needed to accomplish a goal for which the personal loan is required. Borrowing an amount that is more than what is required will become a heavy burden during repayment of the loan amount. So it is best to calculate the exact amount that is needed to take a loan by an individual.
Setting a Budget
When a budget amount is calculated before discussion of loan repayment options, it gets easy for the loan applicant to repay the amount without hampering their savings. So it is advisable to work out a budget that will keep the funds reserved for repayment while keeping extra cash handy to use for other purposes.
Paying a Lumpsum EMI
This might sound like a troublesome job but rest assured, this will help in reducing the remaining amount of the installments to be paid to the bank. When there is an availability of surplus money, it should be used as EMI to clear a big block of the net loan amount. This can be done by going for options such as pre-payment, part payment, etc. Clearing the dues as quickly as possible will end the loan repayment tenure quickly too and will help in building a good CIBIL score for future investments.
Now given below are some tips to make the most out of a personal loan:
Understanding one’s Eligibility
Some of the requisites that create the criteria of one’s eligibility are age, type of income, employment, organization name, and history of previous loans. Age is an important factor since it helps determine the tenure of the loan repayment. Young people who are freshly employed are ideal candidates in terms of age to apply for a loan. The type of income is essential to banks as they determine the sort of cash inflow that will be used to repay the loan amount.
Clarity on All Sources of Income
To elaborate on one of the criteria above, disclosing all types of income a borrower earns will help get a low rate of interest for the personal loan. An income type can range from a salaried job to wages earned from providing rent. There are many sources from which you can have a monthly income and these income types must be disclosed to the bank.
Lender as a Guarantor
Many lenders are willing to offer personal loans at feasible interest rates. One can apply for a personal loan in a bank by keeping the lender as a person who can provide a guarantee for their income. For this, the relations between the loan applicant and the lender should be built on mutual trust. Then it makes it easy for the lender to assure the bank that the applicant’s income source is reliable and repaid timely, which eliminates the possibility of loan default. The lender can become the guarantor according to the bank policy. This will ensure that the bank will provide a proper rate of interest for the personal loan.
Applying with a Co-applicant
When an individual applies for a personal loan along with a co-applicant, the chances of getting the best interest rates and deals on the loan become higher. The upside to opting for a personal loan with a co-applicant is that it will divide the equated monthly installments to avoid the burden of repayment on a single applicant. It is best to compare the interest rates of different banks before borrowing a personal loan along with a co-applicant.
It is always best to consider the loan repayment options at the personal loan interest rate possible. That makes it easier to manage the extra pending funds using a personal loan so that it does not become a strenuous affair and leads to a debt trap.