Hyderabad: You faced many hassles in taking a personal loan in the past. Things have changed dramatically now. They are giving digital loans instantly and with a lot of ease. Because of this, you may consider taking a digital loan without considering pros and cons. This will prove costly. Find out what aspects you must consider before going to a digital lender.
Most often, digital offers are made without you asking for one. No need for application and documentation that used to take a lot of your time while physically dealing with your bank. Moreover, there is no need to wait for days together to know whether your loan is sanctioned or not. You know beforehand how much loan you will get. The new generation of 'fintech' companies are vigorously competing in giving loans.
'Digital lending' involves taking personal loans through online websites or apps. Fintech start-ups mainly offer these. Funds are deposited into borrowers' accounts within minutes. Financial experts say that if you take such loans in haste, your are sure to land in some problems later. Reports are surfacing now and then about borrowers facing harassment from loan apps.
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It is important to think carefully before deciding to take a personal loan. First you should assess how much you need. Then decide the extent of the loan to be taken. While taking a loan, one should be aware of the costs involved. Look at the processing fee, prepayment, late payment fees are. If these expenses increase, your loan amount will decrease.
Another important thing to keep in mind while taking a personal loan is that instalments should not be more than 40 percent of your total income. If the payments increase, it hinders efforts to achieve your financial goals. Before applying for personal loans, make sure you have a good credit score. A credit score is based on your repayment record in existing or previous loans.
A good credit score should be above 750. A credit score lower than this will make it difficult to get a loan. In some cases, the lending institutions charge high interest rate. Paying the instalments on time and using a credit card with a small amount can increase the score.
Be careful in selecting the lender. Of late, some companies are getting bogged down in scams. When we provide our personal information, such organizations may misuse it. If our personal data falls into the wrong hands, they may commit frauds with our credentials. So, take all precautions beforehand. To play safe, always take loans from the RBI approved institutions.
