Personal loans are still a popular and useful way to get credit because they have a long list of key benefits, such as fast funding, no restrictions on how the money can be used, few paperwork requirements, and no need for collateral or security.
So, let’s figure out what you need to keep in mind before you apply for a personal loan by asking yourself these questions and making sure you’ve checked off some boxes:
Should you get a personal loan if you need money right away?
No matter how well we plan our finances and invest on a regular basis, unplanned emergencies can always put us in a financial bind, forcing us to borrow money to cover unexpected or unmanageable costs. In these situations, personal loans are usually the first thing that comes to mind when there is a lack of money or a financial emergency. Borrowers can get aKotak Personal Loan easily and without a lot of trouble because there isn’t much paperwork involved, and the eligibility requirements are set to fit the needs of different borrowers.
How important is it to check your credit score before applying for a personal loan?
When you apply for a Citi personal loan, your credit score is one of the first and most important things that lenders look at. Since having a good credit score can make it easier for you to get a loan, make sure to do things like paying your loan payments and credit card bills on time and regularly, keep your credit utilisation ratio below 30%, and, last but not least, check your credit report every so often. As many lenders also decide on an applicant’s interest rate based on his or her credit score, you should check the interest rates that apply to your credit profile.
Which of the many lenders should you choose?
Personal loans are offered by almost all banks, including Kotak Personal Loan, NBFCs, and fintech. Interest rates usually vary a lot, so it’s important to choose the right lender for your loan needs. Fintech companies that offer personal loans with smaller loan amounts and shorter terms to meet borrowers’ urgent needs for short-term funds have made it even more important for borrowers to choose the right loan product and compare offers from different potential lenders before making a final decision. Before you decide on a lender, make sure to look at the interest rates. Once you’ve checked it, compare the rates with those of other lenders. Then, go with the lender whose rates are the lowest and whose service terms are the best.
If you want to get the best loan offer based on your eligibility and loan needs, you might want to think about getting a Kotak Personal Loan after taking a close look at its features and your eligibility and loan needs.
Before choosing a lender, make sure you don’t just compare the interest rates. Also, look at the processing fee, prepayment fees, and other terms and conditions.
What should you think about when choosing the tenure of a loan?
When deciding whether or not to give you a loan, lenders usually figure out how much of your current income goes toward your EMI payments. This is called your EMI-to-income ratio. Since most lenders prefer to lend to people whose FOIR is between 40% and 50% (including the EMI of the new Citi personal loan, you should choose a loan term whose EMI keeps your FOIR within this range.
With repayment terms of up to 5 years for Kotak Personal Loan and most other personal loans, borrowers with low repayment capacity may want to choose a longer repayment term. But keep in mind that if you choose a longer term, you will also pay more in total interest. And to lower your overall interest costs, you might want to pay off your personal loan early when you have extra money. Just make sure that the amount you save on interest by paying it off early is much more than the amount your lender might charge you for foreclosure if they do.
Should you use a credit card instead of a personal loan when you need money quickly?
Most of the time, it’s better to use your credit card to make up for financial shortfalls than to wait for a Citi personal loan to be paid out. Choose EMI conversion facilities or a loan against your credit card if you can’t pay off the whole bill in one lump sum by the next due date and need to pay it off in smaller chunks over 3–60 months.
If not, you can get personal loans after looking at the interest rates of other lenders. Personal loans should be chosen when the loan amount is large, and the person can wait 2–7 days for the loan to be paid out as the interest rates on these loans are usually lower than those for credit card EMI and loan against credit card for people with the same credit score. Taking out a Kotak Personal Loan will also keep your credit limit open so you can use it to pay for day-to-day expenses and emergencies.
Before getting a personal loan, what kind of research should be done?
Prospective borrowers can improve their chances of getting a Citi personal loan by doing things like reviewing their credit profile before submitting an application, choosing a loan term based on their ability to pay it back, comparing different loan offers, not sending loan applications to multiple lenders, and not switching jobs often.
Can someone with a low credit score still get a Citi personal loan?
Personal loans are usually more difficult to get approved for than other types of loans because they are not secured. People with low or no credit scores may not be able to get a personal loan, or the lender may charge them a higher interest rate to make up for the higher credit risk they are taking on.
