Personal loans: When you apply for a personal loan, it is important that you aim to get it at the lowest possible rate of interest. What will you do to make that happen? It is imperative to apply for a number of financial institutions and get the best possible deal. Here, we explain a step-by-step process to follow that can help you secure the best personal loan deal.
Personal loan: This is how you can secure a good deal
I. First of all, identify the requirement of loan – whether it is to spend on a wedding or for some personal emergency, etc.
II. If you have identified that, make a plan of total expenses and try to borrow slightly more or less based on what are your alternative sources of funding. For instance, if you can chip in ₹one lakh and you require ₹5 lakh then it is recommended to take a personal loan of only ₹4 lakh.
III. Now it is important to check your credit score which plays an important role in fetching personal loans on convenient terms.
IV. If your credit score is high – say above 720, you are recommended to look for a loan at a lower rate of interest.
V. Approach the bank with which you have a regular banking relationship. It is easier to get a loan from the bank where your salary gets credited.
VI. At the same time, enquire with one or two more banks to find out the interest rate at which they can offer you the loan.
VIII. Try not to approach too many financial institutions since this leads to hard inquiry which can impact your credit score adversely.
IX. Submit your documents online and apply for the loan. These documents typically are 3 month salary slips, appointment letter, aadhaar, PAN and company ID.
X. In case your bank loan gets declined by the top bank because your credit score is lower, then you may approach an RBI-approved NBFC or some registered fintech platform. These platforms generally offer loans at a higher rate of interest.
Disclaimer: Mint has a tie-up with fintechs for providing credit, you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.
