If you are thinking of applying for a personal loan you should know that personal loans are unsecured loans and hence the rate of interest is very high. You should be thinking of a personal loan only if you do not have any asset to pledge to banks. If you have property or if you have a fixed deposit, taking a loan by providing them as collateral will work better as the rate of interest would also be cheaper. Remember that you are taking a loan and you need to repay it, so a loan with a lower rate of interest would be beneficial for you.
If you need to take a personal loan do it only after exhausting all the available avenues of financing. Just taking a personal loan to enhance you luxury is not right. Some people take personal loans to buy cars, it is a wrong financial decision, because car loans are available and the rate of interest is cheaper.
Once you have decided that you need to apply for a personal loan you need to compare and find the cheapest loan on offer. There are many websites that allow you to compare interest rates and you can easily do it and find the best personal loan offer for you. Remember that you will be repaying the money and it is your hard earned money, so opt for a personal loan with the least interest rate.
Many banks waive the processing fees. Processing fees can seem to be a small amount but each penny saved is a penny earned, so ensure that you pay less processing fees or no processing fees at all.
If you feel that you need to make the payments at the earliest and need not wait for the tenure to end, then you need to make prepayments. Some banks have a prepayment penalty option as they are interested in getting the full interest. Check this out before opting for a personal loan. Nowadays nearly all banks allow prepayments, but it is usually after a few months of taking the loan. Read about the prepayment procedure and if part prepayments are allowed after a specified time, then opt for it and make prepayments as you will save money.
Check the EMI that you need to pay every month. Calculate how much you will be paying over the tenure of the loan. Select the bank that offers the lowest rate of interest as you will be paying less over the term of the loan.
In India, CIBIL is the organization that tracks your credit history. It is essential to maintain a good credit history as all loan approvals are based on your credit history. If you default even once then your credit history would be spoiled, so ensure that your credit history is good by paying all your dues on time.
Salaried persons, self-employed persons, self-employed professionals are all eligible for personal loans but it is necessary to have a good credit history to get a personal loan.