Instant Personal Loan Hacks You Need to Know Before You Reach Out to Loan Providers

You never know when the need for a personal loan can arise. Whether it’s for a medical emergency, home renovation, or an unplanned expense, instant personal loans can be a big help when it comes to finances. In addition, they often come with great deals, with lesser interest rates, multiple repayment options and more, which can seem to be very good.

However, it always pays to be more cautious when you are dealing with personal loans. Even if the personal loan offer is too good, you never know what you might be signing up for, if you are not careful with it. 

That is why, we will magnify some of the most important things that you should always check, before you sign the dotted line on the next personal loan offer that you receive. 

Always check your credit score

Your credit score is a critical factor in loan approval and interest rate determination. In India, credit scores are maintained by credit bureaus like CIBIL, Experian, Equifax, and CRIF High Mark. A higher credit score (typically above 750) can significantly increase your chances of loan approval and fetch you lower interest rates. Check your credit score regularly and rectify any discrepancies before applying.

Ensure you only apply for a loan that you can repay

Determine the exact amount you need before applying for a loan. Borrowing more than necessary will lead to higher interest payments, while borrowing too little might not meet your needs. Calculate your requirements meticulously and apply for an amount that covers your expenses without stretching your finances thin. Using a personal loan EMI calculator can be of great help to ensure that you can pay back your loans on time, without any hassles.

Read more: What is personal loan recovery?

Check your personal loan eligibility conditions

Before applying, ensure you meet the personal loan eligibility criteria. Common criteria include:

• Age: Typically between 21 and 60 years.
• Income: A stable monthly income, usually above ₹15,000 (varies by lender).
• Employment: Any kind of employment works, generally. However, it can vary by lender. 
• Credit Score: Generally above 650-750.

Meeting these criteria increases your chances of approval and helps avoid unnecessary rejections that could negatively impact your credit score.

Compare the personal loan offers from various lenders

Different lenders offer varying interest rates and terms. It’s essential to compare offers from multiple banks, NBFCs (Non-Banking Financial Companies), and digital lenders. Use online comparison tools to evaluate interest rates, processing fees, prepayment charges, and other terms. This will help you find the most cost-effective loan offer. 

Read more: What is a bridge loan and how does it work?

Pre-approved personal loan offers are better

If you have a good relationship with your bank, you might receive pre-approved loan offers. These offers usually come with attractive interest rates and quicker disbursement. Check your bank’s internet banking portal or app for any pre-approved loan offers. However, make sure you also compare the pre-approved personal loan offer against some other personal offers that you receive from other banks or NBFCs. 

Do not apply for multiple personal loans

Applying for multiple loans simultaneously can harm your credit score. Each application triggers a hard inquiry on your credit report, which can lower your score. Instead, apply to one lender at a time, preferably starting with lenders where you have pre-approved offers or existing relationships.

Pre-pay your personal loan 

If your financial situation improves, consider making prepayments or part-payments to reduce the loan tenure and overall interest burden. However, check for any prepayment charges in your loan agreement before doing so. Some lenders impose penalties, while others might offer flexibility.

Read more: About personal loan prepayment – benefits, charges & more

Seek advice on personal loans

If you’re unsure about any aspect of the loan process, seek advice from a financial advisor. They can provide insights into the best loan products for your needs, help you understand the terms better, and assist in planning your finances to manage loan repayments effectively.

Instant personal loans can be a financial lifesaver in emergencies or when you need quick access to funds. However, as with any form of credit, it is essential that you understand that the loans have to be paid back along with interests. Therefore, whenever you apply for a personal loan, make sure you have the complete repayment plan in your mind. Thus, you will not get dragged into an endless cycle of debt, but build your credit score and have a good personal loan experience.