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SOME FACTORS TO CONSIDER BEFORE TAKING A LOAN



People borrow money when they need it. And the primary source of money for them is bank or non-banking finance companies. They are a prime source of debt financing. Bank loans have a pre-fixed interest rates that have to be repaid at fixed intervals i.e., monthly, quarterly or annually. Applying for a loan can be a significant decision, so it is important to make a smart decision. These are some factors to consider before taking a loan that you have to keep in mind.


Check Your Credit History
Your credit history says a lot about you. It tells the lender whether you’re responsible and indicates the likelihood that you’ll be able to pay off your debts in the future. It is the significant criteria that lenders use while approving loans, so it’s a good idea to "Check Your Credit Score" before filling out an application form.

Purpose of the loan
The most common mistake that people often do that they are unaware of the reason and purpose of the loan requirements that makes them to fall in debt-trap. The rates of interest and other charges on personal loans are very high and one should avoid this option to the greatest extent possible especially for meeting non-essential needs.

Comparison of Lenders
Don’t fall for the great offers you get on email or via SMS. Although it is convenient to say yes to your own bank’s great deals with which you already have a relationship, you may be missing out on better deals if you don’t compare the lenders in market thoroughly.

Check processing charges
Loans usually come with hidden processing fee, but some lenders slip in other charges also. It may appear that a processing fee of 1-2% is not very high, but there may be some hidden fee payable to stay careful about.

Avoid applying multiple loans
Whenever you "Apply For a Loan" the lender checks a copy of your credit report from the credit bureau like CIBIL, Experian and Equifax. Your credit report shows the dates on which lenders made their checks. In case of two or more such loan eligibility checks show up on your credit report close to each other, you are perceived as a borrower with too many expenses and it decreases the chances of a successful loan application approval.

Read terms and conditions carefully
One should read and understand the various terms and conditions of a loan before signing any legally binding document including loan agreement. Most of the times, part payments or pre-mature closure of loans are not offered unless you pay a penalty.  Ensure that you clarify all the pros and cons before taking the final decision.You should carefully evaluate your capability to pay the EMIs regularly before taking a loan.  As a thumb rule, the EMI amount of a loan should not be more than 10%-15% of monthly net income.

You can apply for attractive loan offerings with best possible interest rates and terms for Personal Loan, Business Loan, Home Loan and Used Car Loan from ShubhBank.

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