Five Things To Consider Before Taking Personal Loans

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Nowadays, it is very common to find a minimum of one email every day in your inbox telling you about pre-approved or instant loans. The marketing team of the banks, with the attractive advertisements, makes you feel like the loan offer has been made just for you. Do not fall prey to such traps. Keep calm and try these top 13 lending club alternatives who will consolidate your options into one convenient bidding war to obtain personal & payday loans.

If you really need to avail personal loans for an emergency, the following are the five things that you must consider.

1. Interest rates: The personal loans have a high-interest rate as they are lacking in security. In this case, you are not keeping any asset as collateral, so the lender has no guarantee of getting the loan amount back. This is also one of the most difficult loans to obtain because of its nature. You will see that a secured loan disbursed to your account is far more hassle-free. There are two ways to go about the interest rates: fixed or variable rate. Go for the rate that works for you.

2. Penalty charges: The penalty charges on personal loans are heavy. If you are not able to pay the dues on time, be ready to shell out quite an amount as penalty. It will be helpful to you if you find out the exact details of the penalty before you apply for the loan. The affordability of the Personal loan includes the penalty charges as well.

3. Credit history: Check your credit prospects beforehand to know if you have a chance of getting the loan. Pay off any pending credit card dues as it reflects poorly on your credit history. Banks keep a strict eye on the credit details to gauge your reliability of paying back the Personal loan. Poor credit history can lead to higher rate of interest on the loans in most cases and complete refusal to offer you the loan in some cases.

4. Search the best deal: You would want to go for the loan with the lowest interest rate. The rate of interest is directly related to the cost of borrowing the money from a lender. Also, look into the tenure of the personal loan. The longer durations generally have fewer interest rates than the shorter duration ones. But sit down to calculate, and you will see that you are paying more for the long duration. So, until it is absolutely necessary, opt for a short duration loan.

5. Need for the loan: This point refers to your intention of applying for the loan. It is best to apply for such loans when there is a genuine need, like hospitalization, marriage or education. But if you are looking for the loan amount to invest in stocks or commodities to gain a higher return, then refrain from taking the loan. Taking loans based on high return speculations of stocks is never advisable.

So, if you are planning to apply for a Personal loan, do keep these five points in mind and make sure your financial transaction is a breeze.