Things you should know

There may be charges like credit check fees, loan origination fees, a prepayment penalty for early repayment of a loan or a late payment fee. 

Managing your money and loans needs planning and budgeting. Analysing whether you can make the repayments without defaults and worries that the loan can hit your savings is very crucial. However, there are ways to manage personal loans effectively. 

• Get the paperwork ready before applying for a personal loan, and know about your lender.
• Educate yourself and understand the costs. For example, know about the annual percentage rate (APR), which is the annualised cost based on the interest rate and fees.
• There may be charges like credit check fee, loan origination fee, or a prepayment penalty for early repayment of a loan or a late payment fee.
• Consult with your banker on the types of personal loans available.
• Know your credit score before applying for a loan.
• Always pay close attention to details like interest rates, fees, repayment terms, borrowing limits, and collateral requirements.
• A shorter repayment term comes with lower interest, while a longer repayment period includes a higher interest rate.

Manage your personal loan

Managing your money and loans needs planning and budgeting. Analysing whether you can make the repayments without defaults and worries that the loan can hit your savings is very crucial. However, there are ways to manage personal loans effectively.

• If you have multiple personal loans, repay the loan with higher interest.
•  Consolidate your loan. If the personal loan is huge, consider taking a loan against your property at a lower interest and paying it off with higher interest.
• Suppose you got a salary hike. Increase the EMIs. The greater the EMI amount, the less the rate of interest will be.
•  In case you get a bonus at work, prepay the loan amount. Some loans allow prepayment without penalty.
• Consider switching to a lender with a lower rate of interest.
• Make timely payments to avoid late payment fees that may affect your credit history.

Secured or unsecured personal loans

Personal loans can be of two types – secured and unsecured loans.

Secured loans are such loans that include collateral for availing loans. Collateral is an additional asset that needs to be attached to the loan as security. For example, a secured personal loan has cash assets such as a savings account or certificate of deposit and physical assets like a car or any property. In case of any default, the collateral is set off with the loan.

Unsecured personal loans require no assets. However, unsecured are riskier for the banks and may come with a higher interest rate. Therefore, banks, credit unions, and online lenders offer secured and unsecured loans based on qualifications.

Personal loans made easier

Digitalisation has made life much more accessible and flexible in all ways. Personal loans are made easier with online lenders in the present times. They may not require collateral, which makes the process easy. One can get a personal loan online anytime; it is easy and convenient to get a loan. Digital personal loans enable instant access to funds; all that is required is the borrower’s identification details and income records.

A more flexible credit solution

Personal loans are the most flexible credit solution for those in need of funds to cover expenses. They are versatile, easy to avail, and a great way to finance personal or emergency needs. And want to know why? Look below.

• Enjoy quick approval within 24 hours with a strong credit score and history.
• Personal loans don't ask for collateral for security.
• Personal loans can be used for multiple purposes, from buying an iPhone to covering medical expenses.
• An affordable personal loan that covers your repayment capacity can improve your credit score. However, it is crucial to make your EMI payments in time.
• Personal loans require minimal documentation and are easy to avail through online processing.