Today, taking a personal loan is very easy – all thanks to the improved technology. A few years ago, applying for a personal loan was winning a battle. But today digitisation has made the lending convenient, as today you can apply and get a personal loan online. This is the reason people in large numbers apply for such unsecured forms of loans. On the other hand, to know the right process and methods for applying a personal loan is important for borrowers, as sometime an offer can lead to financial instability or the crackdown on your savings. If you’re curious, then what steps should you follow to get a personal loan? Then read this blog.
Choose your lender carefully
Because of the advanced technology, banks and NBFCs have narrowed the gap between a lender and the borrower. Thereby every lender hates to throw his chances to woo the customer. On the other hand, a borrower cannot make a wise decision every time as lenders follow a borrower on email or SMS. Most of the borrower get convinced by the first offer, hence ignore to research for better loan offers. Thus, a borrower should compare other lenders and then decide. These days you can see, compare, and apply for a personal loan online using a Fin-tech platform as it helps you to choose a perfect lender.
Learn to calculate the interest rate
As banks woo their customers by using different tactics, the latest one is a flat interest rate. Many borrowers get trapped into flat interest rate schemes as they don’t compare reducing balance interest rates and flat interest rate. Being a smart borrower, learn to calculate the interest rate on both forms of interest rate then go ahead with your application. On the flat rate powered loan, they charge the interest on the principal loan amount. Contrary, they charge the reduced rate of interest on the reducing principal. If you choose a flat interest rate personal loan, you pay a huge amount as interest. So, always choose a reducing rate of interest model. Suppose, you want to take a personal loan; you can check the Axis Bank personal loan interest rate and apply for it. The best part of the Axis Bank personal loan is, they charge interest in reducing balance.
Avoid 0% EMIs
The 0% EMI is a clever tool to attract a borrower. It all starts with the partnership of the distributor of consumer durables. However, RBI is strict with such schemes still lenders manipulate it in such a way that buyer usually fall for it. They don’t even bother to know what’s in it for a lender. Generally, a lender spread this as an interest free loan and hide the amount of processing fees and other charges. Suppose if you check your personal loan eligibility for a 0% EMI loan and buy a T.V. worth Rs 50,000, at 0% interest, on a tenure of 6 months by paying a processing fee of Rs 2000, you won’t realise that you have already paid over 14% on the borrowed amount.
Never opt for advance EMIs
By paying the advance EMIs, a borrower also pays more than the agreed rate of interest rate on personal loan. Assume a lender ask the borrower to pay 1-2 advance EMIs in advance during the loan of Rs 1 lakh for 18 months at 14%, the EMI for such loan will be Rs 6190. After calculating the interest rate later, you realize that you are already paying 17.5% instead of 14%. To never get trapped in such offers, always say no to advance EMIs. For instance, to take a best personal loan, apply for Axis Bank personal loans as they never ask for advance EMIs.
Don’t approach multiple lenders
Searching for a lowest interest rate sometimes can be counterproductive. When a person approaches a lender for a personal loan online or offline, it summons his credit report to gauge his capacity to repay the loan. If you approach multiple lenders simultaneously, you might seem as a credit hungry person, and your credit score may affect negatively. Hence, loan seeker should check the interest on a third-party platform, then apply for a personal loan.
Today, lenders are playing smart to attract the borrower. But for a borrower, it’s the time to think even smarter. Before finalizing the lender, you must compare various lenders, then make your decisions. If you find that a lender is making a loan offer at a 0% interest rate, then check other charges before saying yes to it. Always remember that advance EMIs and 0% loan offers are bad for your financial health. Besides that, also know if the lender is offering a loan on a flat interest rate or a reducing interest rate, as it helps you to save a whopping amount on your loan.