• What should we know before applying for a Personal Loan?

    Finding a bank to apply for a personal loan is as difficult as paying the loan itself. There are different categories of Banks, who provide different package of loan. The person who needs the loan should make up their mind over how much he wants and for what he wants. Some of them are pretty obvious needs. But others are hideous. There are few things that you need to know about taking loan from any Bank. Or before getting in a contract with them without even knowing the consequences and responsibilities that comes with it.

    Some of them are as follow:

    1. Rate of Interest:

    There are two types of interest rates, variable and fixed. Fixed interest rates tend to be higher, by comparison, when you take the loan out, but your monthly loan payment will always remain the same. Variable interest rates may be low when you take out the loan, but as the interest rates changes so do your loan payments. On the surface, a variable interest rate may seem attractive, but a fixed interest rate is your safest bet. Banks usually give different interest rates because not all of them have the same policy.

    1. Hidden Charges.

    When you sign a contract after taking the loan, the policy that you chose from the bank for the loan, It also have hidden charges in it. For example they take higher interest on other things such as card bill, phone bill and some other bills. Just make sure that you don’t get carried away with the talking behavior of the lenders. They’ll do or say anything to make you accept the loan. They’ll show you the bright side of it while covering the dark side which comes later when you have to pay back the loan.

    1. Unsecured Personal Loans:

    Unsecured loans have the higher interest rate because lender takes a big risk on giving out the loan to an unknown person. And if you have any assets with you that you can use as collateral for the sake of loan, you’ll most likely get the loan passed but with a better interest rate. The downside of unsecured loan is that you put your personal assets at risk, and if you can’t repay the loan, your assets are handover to the lender of the loan. This is another main reason that you should keep in mind that rather you can afford the loan payment or not.

    1. Secured Personal Loans:

    Secured loans are those loans which are protected by collateral of some sort or an asset. If you want to take a loan from the bank or a company, they’ll get hold of that asset or property that you own, till you pay back the loan, including interest. Secured Loans are usually the best way to maintain and get the large amount of money. Because lender is not likely to give away a large amount of money if he is not assured that he’ll get paid back. Putting your asset on the risk will make him comfortable enough to know that you’ll do anything to get the property back and pain the loan.

    1. Company Reputation:

    Most of the companies that provide loans to the clients, they do whatever they can or whatever it takes to make the client comfortable in taking the loan. They have the best salesman as their employees. Some of them even blackmail the clients by some threats or using the loan sharks process. You need to find out from other people about the lender that if he has any bad reputation in this field or is he a scam. Most of them have hidden agendas on getting as much as interest possible, from you.

    1. Don’t apply for too many loans:

    This is the main point here that you need to keep in mind. If you’re applying online for a company or a bank through a credit card, they can see your history. Having lots of applications on your record makes you look desperate and in financial problems. It also leaves a footprint on your credit record. As a result of that, lenders will see you as a bad investment. And because of that your latest application is less likely to be approved.

    These are the things that you need to keep in mind before applying for loan in the bank or any company.