What to do and avoid when applying for an online personal loan

Emergencies of any kind, especially those that require immediate medical attention, can catch you unaware and underprepared. While dipping into your savings is always an option, there are chances that you may not have all you need. Thankfully, you can get an online personal loan to address these unplanned expenses in a timely manner. Since it is unsecured in nature, you can get an online personal loan in 24 hours or less when you choose a lender who has end-to-end digital processes, simple eligibility criteria and minimal documents required for personal loan approval.

While an online personal loan has many advantages, remember that not all personal loan offerings are the same, and choosing the right lender is critical. There are certain factors that you need to consider to get an instant personal loan quickly and in a stress-free manner. To help you do just that, here is a list of dos and don'ts to follow.

Things to do when applying for a personal loan

Figure out why you need an online personal loan

Unlike other loans such as home loans or car loans, you can get an online personal loan to remedy a cash crunch or meet a goal, without any restrictions on usage.

Generally, borrowers take an online personal loan to either manage a large expense such as relocating to a new city, pay treatment costs during a medical emergency, or for debt consolidation.

However, not paying your EMIs on time or defaulting on repayment can hurt your CIBIL score, which will affect your chances of getting a loan in the future. So, decide why you need a personal loan and plan your repayment in advance to keep your finances healthy. Overborrowing is not a prudent way to use these funds, and it can put pressure on your finances.

Check your credit score before applying for a personal loan

An online instant personal loan is unsecured in nature, making your CIBIL score an important factor during the lender's verification process. Before applying for a personal loan, it is best to get your credit report and check your CIBIL score. A high score of 750 helps you get quick approval and fast disbursal of the loan amount. Moreover, a high CIBIL score ensures that lenders offer you a more competitive personal loan interest rate and a larger loan amount.

Compare lenders to get the lowest interest rate

Always compare interest rates offered by different lenders to ensure that you get the lowest interest rate on personal loan. Even a small decrease in personal loan interest rate can help you save substantially on your interest outgo every month, reducing the cost of the loan. In addition to this, also check other charges such as processing charges, prepayment charges, penal interest and any additional fees such as origination fees or statement charges.

Pay attention to details in the loan agreement

It is important that you take the time to read the fine print with utmost attention to ensure that every detail such as the loan repayment tenor, repayment schedule, and interest charges mentioned are accurate. Moreover, check for any additional fees applicable to ensure you are not caught off-guard in the future. Some lenders don't mention such fees upfront and the only way you can learn about them is by reading the loan agreement.

Check pre-approved offers

Keep an eye out for lenders that offer pre-approved or promotional offers for online personal loans. These may be offered by NBFCs, banks or other aggregators and may help you access funds faster and with favourable terms and conditions. However, make sure you do your research to avoid falling for dubious schemes from unknown loan providers. It is best to do your due diligence to ensure that the lender you choose is reputable and trustworthy.

Things to avoid applying for a personal loan

Spend funds from a personal loan on non-essential expenses

While there is no restriction on the end use of an online personal loan, avoid taking a personal loan just to finance luxuries. Every loan, including a personal loan, requires regular, steady repayment. Not paying back your personal loan in full, by the due date, can lead to incurring penal interest in addition to bringing down your CIBIL score.

Miss your EMIs

Ensure that you have a plan in place to address your EMIs every month, taking care to not miss the deadline. Defaulting on your monthly payments can not only incur heavy fines, inflating the cost of your loan, but can also severely decrease your CIBIL score. If you are having difficulty with repayment due to the loss of a job or other reasons, talk to your lender to restructure the loan terms.

Opt for lenders with gimmicks

While opting for an online personal loan ensure that any promotional offers you see are valid. Some lenders offer low interest rates as a promotional offer, but charge exorbitant hidden fees later, inflating the cost of the loan. It is best to opt for a lender with no hidden charges or terms.

Choosing the right lender can be key to an affordable and hassle-free borrowing experience, and you cannot go wrong with a renowned lender like Bajaj Finserv. With the Bajaj Finserv Personal Loan, you get access to a high loan amount at affordable interest rates. Moreover, you can easily repay this loan over a flexible tenor ranging up to 60 months and have to submit minimal documents.

What's more, eligible customers can get an instant personal loan from Bajaj Finserv through a 100% digital process that requires zero paperwork, without stepping out of home. After reviewing a pre-filled form for a pre-approved loan, you can get the funds now in just 20 minutes if you are an existing Bajaj Finserv customer. So, check your pre-approved offer today to get instant funds to meet all your goals.