Why are Indians lapping up personal loans? Are you credit ready?
Personal Loans have fast become a new favourite among Indian households. According to RBI, more than 96% of new bank loans were Personal Loans in FY 2018-19. With three consecutive lending rate cut by the central bank this year, the rising trend of retail loans seems to persist in FY-19 as well. For, new loans are becoming faster, easier, and safer amid the current land space.
In a recent study, Boston Consulting Group evaluated a larger upswing for the segment. It measured the size of India’s digital lending market space at a staggering $1 trillion (approximately Rs 68 trillion) in the next 5 years.
Undeniably, the digitisation of Indian banks post demonetisation, and adoption of new lending practices involving an online application, instant in-principal loan approval and eKYC for consumer identification and verification have rapidly mushroomed unsecured lending in India.
The borrower doesn’t need collateral, co-borrower, or guarantor to avail of funds. Your credit history and credit score play a vital role in making you eligible for attractive unsecured credit products like SBI Personal Loan.
The consumers today are flushed with attractive offers, ranging from preapproved loan schemes to 0% processing fees, to instant loans, to EMI free loans, to no cost EMI for consumer goods financing and what not! You literally get utter flexibility in choosing the loan amount, tenure, and repayment terms.
However, responsible borrowing is the best advice to follow. Let’s find out how to ever borrow smartly and never get bogged down by the credit availability.
Steal a deal
There is no one-size-fits-all product. So before you approach a lender for fast credit, do your homework and get ready to tap the available benefits in the market.
Often, preapproved loans for preapproved amount come at better rates. You must learn to say NO to the available credit limit when you need a handful of it. Clearly define your loan requirement and borrow strictly for most important cash lapses.
Work on credit score:
Interest rates for Personal Loans vary greatly according to the applicant’s profile. To tap the best interest rate, you must ensure that you do not roll over your Credit Card bill and repay the card dues on time, besides diligently repaying utility bills and channelizing repayments on time. Good credit history is one of the best reviews for your good financial health.
If you could successfully master your credit score, you can choose the lender of your choice without any hassle.
As important it is to find the best interest rate, as is to evaluate your credit repayment capacity judicially. In other words, you should borrow only as much as you can repay successfully. Use free personal loan EMI calculator and evaluate the monthly repayment burden before you approach the bank.
With new age online lenders, borrowing has revolutionalised in India. You can borrow on the go. Loans are available for 3 months to 60 months with a few taps on your mobile phone. If you require a short term loan, you can save considerably by sealing a shorter tenure.
Repaying your loan on time builds your credit score, and this is why a lot of us dutifully follow the loan term by setting up a standing instruction for loan EMI. However, prepaying a loan leads to easing your credit borrowing capacity. In case you have plans to avail another substantial loan such as a home loan or education loan in the near future, foreclosing your Personal Loan could be a more viable option. Generally prepayment of a loan attracts 4% charge on foreclosure, however, if you choose a suitable product like Axis Bank Personal Loan, you can prepay without any fee.
Herein, raking in professional advice or using a loan comparison website can be a helpful tool in locating the best deal in the market.
After all, staying equipped with the right information, keeps you credit ready, happily ever after!