Personal Loans: Have you recently experienced financial difficulties that led you to take out a bank or nonbank financial company (NBFC) loan? If so, there are several things to be aware of, which we outline here. For example, one should ensure that the interest rate on a personal loan is not excessively high and that borrowing money for the intended purpose is viable. Before you take out any personal loans, you should know some of these important issues.
1. Interest Rate:
The main important factor to consider before taking out any personal loans is to check the rate of interest. This percentage varies from Lender to lender. So it is highly recommended to choose the lower interest rate, which will help your portfolio build stronger. It is recommended to compare the interest rates charged by different lenders.
2. Monthly EMI:
The second key factor to notice before taking a personal loan is to make sure your monthly EMI is within your budget. It is recommended that the monthly installment be within 40 to 50% of your monthly income.
3. Prepayment Penalty:
The Third and very important step before taking any personal loan is to make sure that your bank doesn’t penalize you too much for your intent of repaying the loan prematurely. It’s also important to note that the RBI recently declared that lenders must let borrowers who choose floating interest rates move to fixed interest rates when interest rates are adjusted.
4. Processing Charges:
It is very important to notice the processing charges before taking any personal loan. A small amount of processing charge is advisable, but some lenders try to charge almost 5% of the loan amount in the name of processing charges. It is highly recommended to check all the charges applied while taking out any loan.
The sole purpose of this article is to inform and raise knowledge regarding credit requirements such as credit cards, loans, and credit scores.
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