It is a common notion that you might find plenty of mails notifies a pre-approved personal loan. It may seem that the loan has been customized for you. But a word of caution though, does not fall into such traps and it is better to explore such loans to the details. In case if you are borrowing to oversee an emergency situation, there are some pointers that would need to be kept in mind as well.
At no point the interest rate should be tempting factor. Check out the fact whether it is a flat or reducing rate balance. It is not only the interest rates there are some other important points of consideration when you are availing personal loans.
Do take all the costs into consideration
It is not only the interest cost that you would need to bear. There are some other costs that need to borne as well.
- Processing fee- of the loan amount banks tend to charge 1 % to 2 % of the total amount as processing fee. A few banks go on to charge a flat processing fee. The lower the fees work out to be the better for you.
- Repayment option- it has been observed that you tend to take a personal loan in order to overcome the short term cash crunch.
- Late repayment option is also another option to consider as well. Banks are known to levy late payment fees in case if you fail to pay the loan on time.
The needs are to be considered and not the eligibility when you are about to borrow.
In case of availing a personal loan only borrow the money that you need. Bank employees may convince you to take more just because you qualify in terms of eligibility. Of all the form of debts, the personal loan happens to be the most expensive form. Why pay interest rates more than what you are supposed to pay. The rule that you need to follow is to borrow as and what you need and do not stretch beyond that.
Keep away from additional by products
Sometimes when you are about to buy a personal loan, the executives sell you some additional products like an accidental insurance plan. The catch here is that you are told that you would need to pay anything upfront and it is going to be added to the cost of your EMI. Just tell them a clear no as already you are paying too much in terms of interest then why not add an insurance premium to it. If you do fall in such traps then there is no one to blame and you yourself having to blame. Just learn to say a no to such offers
Personal loan should be the last resort. If you are facing a cash crunch it would be better to speak to your family or friends and see whether they can help you.