VMPL
New Delhi [India], February 27: Personal loans can be effective in dealing with financially challenging situations. However, before applying for an instant personal loan, individuals must understand the eligibility criteria and estimate the right loan amount. Moreover, they should also look into the hidden charges that might increase the total cost of the loan. Utilising smart borrowing tactics may also help borrowers reduce the overall cost of the loan. This article highlights the hidden charges associated with personal loans, and eligibility criteria and explores a few smart borrowing strategies.
Hidden Charges Associated With Instant Personal Loans
Understanding the hidden charges associated with an instant personal loan can help borrowers estimate the total cost of the loan. Some of the charges are:
Processing, Part-Prepayment and Foreclosure Fees
The processing fee charged by most lenders can vary from 1% to 5.5%. This fee is charged to cover the administrative charges and is deducted in advance. Borrowers who want to repay part of their loan before the loan tenure may be subjected to part-prepayment or foreclosure charges. Some lenders may charge zero part prepayment fees if the prepayment is 25% of the total loan amount.
GST and Late Payment Fees
The total loan amount can increase due to the Goods and Service Tax (GST) that is applied to processing fees and other charges. Furthermore, if an individual misses an EMI payment, lenders may impose penalties. These payments can be in the form of late payment fees and would be a percentage of the overdue EMI. Eventually, these fees may increase the financial burden.
Bounce Charges and Loan Cancellation Charges
Lenders may charge bounce charges if the monthly payment of a borrower bounces due to insufficient funds. Furthermore, if the borrower decides to cancel the loan after approval but before the funds are disbursed, the lender may choose to apply a loan cancellation fee.
Borrowers can avoid unexpected charges and make better financial decisions by choosing a trusted lender.
Eligibility Requirement for Instant Personal Loan
The eligibility criteria vary across various lenders. However, apart from valid address and income proof, the general criteria for qualifying for an instant personal loan are as follows.
Age and Employment Requirement
While the number may vary for different lenders, most lenders prefer their applicants to be in the 21 to 58 age group. Furthermore, salaried individuals must have a stable job and a minimum of one year of work experience. On the other hand, self-employed individuals must have a consistent income source.
Minimum Income and Credit Score Requirement
Most borrowers are required to have a minimum monthly income which may amount to Rs. 15000 for some lenders. Furthermore, individuals must also have a credit score of 750 or above to secure the loan at favourable loan terms.
Smart Borrowing Strategies for Personal Loans
Borrowers can use smart borrowing strategies to optimise the advantages of an instant personal loan. Some of these strategies are as follows.
Comparing Lenders and Borrowing the Right Amount
It is advisable to compare various lenders as the eligibility criteria and interest rates offered can vary. Make sure to choose lenders that have transparent policies, competitive interest rates and an easy-to-use instant personal loan app. Borrowing the right amount will remove unnecessary repayment obligations associated with personal loans. Therefore, individuals must assess their financial strength and needs before applying for a loan.
Check Hidden Charges and Use EMI Loan Calculator
Borrowers can avoid unexpected charges by carefully reviewing various fees such as processing, prepayment, late payment and bounce payment. Calculating the total cost of the loan can be simplified by using an EMI loan calculator that is provided by various lenders. Furthermore, borrowers can also estimate their monthly payments using these EMI calculators.
Understand the Terms and Conditions and Make Timely Payments
Individuals are advised to accept the loan terms only after reviewing various terms associated with repayments, interest rates and penalties. The penalties mentioned can be avoided by setting up auto debit and reminders of the monthly payments. Avoiding these penalties is necessary since missing EMI payments can negatively impact a borrower's credit score.
Conclusion
During an emergency, personal loans can provide financial relief. However, borrowers must look into various hidden charges like processing fees, prepayment fees, and foreclosure fees. Additionally, GST, late payment fees, bounce charges and loan cancellation fees must also be taken into account. Borrowers must make sure they meet age, employment, minimum income and credit score criteria to gain access to capital. Before applying, individuals must compare lenders, determine their budget, use an EMI loan calculator and understand the terms and conditions. Making timely payments can assist individuals in avoiding additional costs associated with late payments of EMIs.
(ADVERTORIAL DISCLAIMER: The above press release has been provided by VMPL. ANI will not be responsible in any way for the content of the same)
