Borrowing money through loans has become a common practice among individuals requiring funds for their financial obligations. There are also different types of loans available in the market which provides funds for every financial need. If you are a seasoned borrower you would know how to pick the right loan but what if you are new? Can you avail a loan all by yourself?
Yes, you can if you are careful about certain aspects of the loan. Here are some important questions which you, as a first-time borrower, should ask before availing a loan –
What is my credit score?
The first thing which you should ask and know is your credit score. Your credit score is an important parameter on which you would be granted a loan. The score is a measure of your creditworthiness informing the lender how likely you would repay the loan. The score is calculated by specified credit agencies and available online. Before you make a loan application, find out and know your credit score.
Am I choosing the right loan?
As stated earlier, there are different types of loans. Before applying for one, you should assess whether it is the right loan or not. For instance, if you want to buy a home, home loans should be chosen. For cars or bikes, there are car and bike loans. For your business, there are business loans and for miscellaneous requirements, there are personal loans. So, zero in on the right loan for your financial need and then apply for it.
Do I match the eligibility criteria?
Every loan has a specified list of eligibility criteria which should be fulfilled before the loan would be sanctioned. Before applying for the loan you should find out the prescribed criteria and whether or not you fit the requirements. Don’t apply for a loan whose criteria you do not qualify on as your application would be rejected and it would reflect badly on your credit score.
What are the interest rate and other charges?
The interest and other charges are the additional payment on the loan which you have to pay from your pockets. That is why you should find out the interest rate as well as other charges associated with the loan. Always shop around for the loan to get the lowest rate so that your loan becomes affordable.
Are the EMIs affordable?
The loan is paid off in monthly instalments which contain both the principle and the interest. Before availing the loan you should find out the prospective EMIs. Online EMI calculators help in calculating such EMIs for the loan you seek. You should make sure that the EMIs calculated are affordable so that you can easily repay the loan without a default. If the EMI is not affordable you should decrease the loan amount or increase the repayment tenure to arrive at an affordable amount. Whatever you do you should ensure to get an affordable EMI.
Also Read: Important factors of CIBIL score
Applying for a loan for the first time should not be a hasty affair. You should ask these questions, get satisfactory answers for them and then apply for the loan so that you get the best deal and your loan is also affordable on your pockets.