You may sometimes require money urgently to take care of diverse requirements right from home renovation and weddings to education of your children, vacations and medical treatments. Whatever be it, personal loans are the answer since you can use the money whichever way you want. People are now keener on applying for small personal loans in order to fund their requirements. The approval procedure is simpler for these loans but there are some things that one should always know in order to get the loan easily. These include the following:
- Credit Score- You should check your credit score before applying for a small personal loan. You should know what your credit rating is and this will give you a fair picture of whether your application will be rejected or sanctioned. The credit score is affected by aspects like your overall credit history, history of payments, debt repayment and type of credit that you possess. Having a credit score higher than 750 increases your chances of getting a personal loan. On the other hand, a lower credit score should make you determined to improve it before applying for a small personal loan.
- Eligibility Criteria- You should always check whether you are eligible before applying. Your age, employment history, income, employer and outstanding debt are factors which have a bearing on your overall eligibility. You should not have applied for a personal loan in the last 6 months and should have a low debt-to-income ratio.
- Homework- Doing your homework will always pay off in the long run. You should compare various lenders on the basis of the maximum loan amount available, the interest rates offered by various financial institutions, prepayment processes and loan tenors. You can compare and check lenders before finalizing the financial institution that is ideal for your needs. Refrain from making multiple loan applications simultaneously since this negatively impacts your credit score.
- Read all terms and conditions- Even if you are essentially applying for a smaller amount, you should invest a little time into reading all the terms and conditions very carefully indeed. Go through all the clauses in your documents since this will keep you aware and you will also be able to assess whether you are getting the best deal or not.
- Repayment Planning- Be careful while planning how to repay your home loan. Always plan out how you will be repaying your EMIs every month. You should have your monthly budget chalked out and a maximum of 30% should be allocated for repaying EMIs every month.