Tips to keep in mind while taking a loan

A personal loan can be a brilliant way to begin any festive season as the interest rates are affordable, the tenures are flexible, and the range of loan amounts available to you are impressive too! As such, you don’t have to stress on the repayment aspect – you can simply choose a tenure with the most affordable monthly repayment option!

Also, you can do so much with your money – travel, plan a wedding, renovate your home, or purchase some exquisite gifts for your loved ones – your options are literally endless. Don’t wait any longer! Stack up on your finances and do more than you could’ve imagined with a flexible personal loan!

Don’t apply with multiple lenders simultaneously

With so many lenders offering personal loans at attractive interest rates during the festive season, you might be lured to apply with multiple lenders with a view to being offered the best interest rate.

If you didn’t know this already, applying with more than one lender at once has the potential to impact your credit score negatively.

Every time you apply for a personal loan with a lender, the lending institution performs a “hard pull” of your credit profile from the bureau, and every hard pull is recorded in your profile.

Multiple hard pulls mean multiple inquiries, and multiple inquiries reflect credit-hungry behaviour, leading to rejections from lenders. Rejections have quite a significant impact on your CIBIL score as well.

Know your credit score and check your eligibility

It is always advisable to know your credit score before applying for a personal loan with a lender, whether it is during the festive season or otherwise. Knowing your score will help you make a more informed decision while narrowing down on a particular lender and improve your chances of approval.

Different lenders have different eligibility criteria that applicants have to meet – while top private banks require individuals to have a minimum CIBIL score of 750, new-age lending startups offer personal finance options to individuals with scores of 600 as well.

Checking the lender’s eligibility norms after knowing your score will help you approach the appropriate lender and keep rejections at bay.

Look out for the best offers

While applying for a loan, it is always recommended that you do some research on the best offers that are currently running in the market.

During the festive season, you’re certain to find a spate of lenders offering a bunch attractive offers - either through reduced (lower-than-usual) interest rates or in the form of gift cards or vouchers.

Doing some research on the most attractive offers that are currently prevalent will help you make the most especially during any festive season.

If you have a really good credit score, you can also negotiate to get the best interest rate. Personal loan interest rates start from 10.99% per annum and go up to 30% per annum (rates vary from lender to lender).

Don’t borrow more than what you need

Well, this is a golden rule while going on for a personal loan – never borrow more than what you need.

If you have a good credit outlook, lenders might offer you a higher loan amount than what you originally requested for, and this often comes with a reduced interest rate (a rate slightly lower than what was initially offered to you).

Borrowing higher amounts will prompt you to pick a longer tenure, and longer tenures are associated with higher interest payments.

So the best idea in a situation like this is to stick to how much you need and not go overboard.

(The writer is the founder and Chief Executive Officer at Qbera.com)