These days, it isn’t uncommon to find at least one e-mail each day about instant or pre-approved cash advance in your mailbox. The creative teams at banks can in fact make you believe that the offer has specifically been custom-made for you. Usually do not fall for the attractive advertisement. You need to avoid unsecured loans to the extent possible. However, if you are borrowing for a crisis, these are a couple of things you must retain in mind before availing Personal loan.
Do not simply fall for the cheapest interest levels. Do find out about if the loan emerges on flat interest basis or reducing balance basis. Flat interest loan are usually offered at lower interest levels. However, that will not mean you will pay less. To find out more on flat rate and reducing balance interest levels, please feel the following post.
Measure the All-In Cost
Interest cost is not the one cost you need to bear. You will discover other charges too. Consider the next costs.
Processing Fee: Typically, banks replenish to 1-2% of the loan amount as processing fee. Several banks charge a set processing fee. These charges enhance the total cost of loan. Lower the processing fee, the better.
Prepayment Fee: Sometimes, you take unsecured loans to tide on the short term cashflow crunch. In such instances, prepayment of loan is a opportunity when the money flows improve. By prepaying the loan, you can save well on absolute interest cost. If you fall in the same category, do consider prepayment penalty costs while aiming to determine all-in cost. Banks use prepayment penalty as an instrument to ensure that the borrowers stay static in the loan and bear the entire interest cost. Lower the prepayment penalty, the better.
Late Payment Fee: Credit institutions levy penalty (late payment fees) if you’re late on EMI payment. If you’re fighting cash flows, do think about this penalty too.
If you want Rs 3 lacs to meet a brief term need, borrow only Rs 3 lacs. Sometimes, bank executives may make an effort to convince that you borrow more (say Rs 5 lacs) only because you meet the criteria. You’ll want received e-mails and cold calls from the banks/credit institutions for the same. An individual loan is one of the very most expensive varieties of debt. Why would you like to pay interest your money can buy you don’t need? Don’t fall for the ego massaging sales page. Borrow only around you need rather than more.
Look for Better Rates
Check around for better rates. Usually do not actually connect with check the rates. This may cause hard enquiries on your CIBIL score and could adversely impact your credit history. You can examine the prevailing rates by calling customer support.
Talk to Relatives and buddies
If you’re taking cash advance to tide over short-term cash crunch, try speaking with friends/family if indeed they can lend some cash. Perhaps, they won’t even charge any interest. However, be certain you can return the total amount as promised. Otherwise, you may conclude jeopardizing the relationship/friendship. Therefore, be honest to yourself as well as your friends/family about your repayment ability. The Company will provide clear and transparency in terms and conditions information to customers so as to enable them to understand.
Conclusion
Do not have a cash advance unless in case there is an emergency. Browse the conditions and conditions of the loan before signing the dotted line. Do not simply pass the interest. Measure the total cost for comparison.