What You Need to Know Before Applying for a Personal Loan in an Emergency

An emergency can strike anyone and at any time. And one may certainly be not prepared for it emotionally and financially. However, not being prepared for an emergency financially can further worsen the situation. In such an emergency, we can look at Personal Loans for rescue.

Personal loans are like saviours when one faces a financial crunch. These loans are available at a comparatively higher rate of interest than the secured loans as it is not backed with collateral. Apply for a personal loan in India by comparing different lenders on online portals like LoansJagat wherein one can compare and choose the lender based on the most suitable rate of interest and other terms and conditions. Availing a personal loan for an emergency may be easy, but one should know about a few key things before applying for it.

  • Eligibility Criteria

Lenders have their own pre-defined eligibility criteria, complying to which is mandatory if you wish to get your personal loan application approved. We recommend individuals to compare different lenders for their eligibility criteria on account of processing fees, loan amount offered, loan tenure, interest rate, age, work experience and credit score etc. One must choose the lender which matches their profile perfectly.

  • Interest Rate

Interest rates might different as per respective lender. Lenders offer loans based on a fixed-rate structure and a reducing balance structure. we recommend reducing rate as it results in lowering the overall cost of the loan by minimising the monthly EMI.

  • Annual Charges

It is important to look at the broader scale and calculate loan cost on account of APR or Annual Percentage Rate. It encompasses other charges like taxes, processing fees, late payment charges, foreclosure charges etc which the borrower will be liable to pay to the lender. It is highly important to take these aspects into consideration as a lower interest rate deal may otherwise turn into a heavy on pocket.

  • Processing time

Personal loan for an emergency is useful only if it gets processed quickly and you get the sanctioned loan amount in your bank account timely. The processing time for personal loans for an emergency is usually a few working days. However, some lenders offer faster approval and disbursal process. Opt for the lender which has the least processing time and doesn’t have stringent documentation requirements.

  • Loan amount

Lenders evaluate the loan amount basis credit score and repayment history. However, if a lender higher loan amount, one should not get carried away and only borrow the amount which is actually required. A loan of any kind is a liability and requires thorough commitment. The interest rate cycle begins from day one. The higher the loan amount, a higher amount of money will go as interest. One should not get overwhelmed and wisely decide on the loan amount.

  • Loan tenure

Personal loans are usually offered for loan tenure of 1 to 5 years. Higher the loan tenure, lower the EMI and more the total interest you will pay throughout and vice versa. Thus, one should opt for a loan tenure keeping the EMI and rate of interest into account.

  • Prepayment Charges

Banks and lenders often charge foreclosure charges if you pay back the loan amount before the tenure ends. Thus, it is very important to get these terms sorted before you choose on the lender. One can negotiate on this aspect if you have good credentials in terms of CIBIL and repayment history.

A lender may go for a personal loan balance transfer if the EMIs feel like a burden over time. It encompasses shifting from the current lender with a higher rate of interest to another lender offering a lower interest rate.  Also, another important thing to remember while opting for a personal loan for an emergency is the fact that as a borrower it is your responsibility to be disciplined in your repayments and monthly EMIs as it could otherwise hamper your credit score badly. The wisest decision is to compare different lenders for their offerings on account of the parameters mentioned above. Fintech enablers like LoansJagat offer an excellent comparative platform and also helps in quick processing and approval of loan application.

 

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