When you talk about taking out a loan, more often than not, you are thinking about home loans or auto loans. However, one of the best loans that can really help you when you have a big cash requirement, especially an urgent or sudden one, is a personal loan.

With personal loans, the bank does not worry about what you will be using the money for. Its main concern is to know whether you will be able to pay it back. If you do have a home or a car that you can put up as collateral, it becomes easier for you to avail of a personal loan and you get better terms too!

Here are a few things you should keep in mind before you decide to sign on the dotted line:

Do your research

The one big mistake many people end up making is taking a personal loan from the wrong bank. Different banks offer varying interest rates. Before you choose the bank, look at all your options. If you have a good credit score, you will find it easier to get a good interest rate. However, if you jump at the first decent rate you are offered, you could miss better loan offers coming your way.

Along with interest rates, the EMI you will pay every month is just as important. Compare the different EMIs to find one that fits your budget the best. You should also consider the fees and charges you will shell out. Compare all these factors before you make your decision.

Be ready with your paperwork

All banks ask for a lot of paperwork (documentary evidence) before deciding your eligibility. Keep all required documents ready, so that you can get your personal loan fast and without hassles.

The main documents you need to have are – identity proof with photo ID (your driving license, PAN card, or passport). Age proof and address proof. You will also need to submit an income certificate with your current salary slip.

Along with all these, the bank could ask for your monthly bills to calculate the EMI you will be able to pay.

Credit score is important

Once you zero in on a suitable bank to get your loan, your credit score becomes quite important. It reflects your ability to avail of loans. If you have a bad score and have defaulted on payments in the past, it will be that much harder to get a bank to approve a personal loan for you. So always make sure your financial affairs are in order.

These are few of the things you have to keep in mind before you apply for a personal loan. If you follow this advice, you will have the perfect recipe to get your personal loan application approved in a jiffy!

W: 533

Ref:

http://www.prokerala.com/banking/articles/choosing-personal-loan.php

http://reachfinancialindependence.com/apply-personal-loan/

 

Disclaimer: Copyright Kotak Mahindra Bank Ltd.

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