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!

Disclaimer: Copyright Kotak Mahindra Bank Ltd.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.