7 factors to consider while taking a loan from personal loan apps

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    Loan App

    The online processing of personal loans has made it more accessible to people. With a personal loan, you can easily handle different financial pressures such as educational expenses, wedding costs, medical charges or credit card dues. As there are many apps through which loans can be processed, choosing the best personal loan app is somewhat subjective. To get a loan all you will have to do is to get the best personal loan app according to your analysis and apply from there. The process will be fast and smooth and if all goes right, within 24 hours you can get the loan amount. Such a speedier way of getting money is called an instant loan and with the help of an instant loan app, you can easily facilitate the process. 

    However, to use the best personal loan app optimally you should be aware of certain things before you apply for a personal loan.

    Purpose

    You should be clear about the purpose of getting a personal loan. If you do not know what amount you will be needing you might take more than necessary and this will destabilise your monthly budget. Even the best personal loan app cannot help you with this. So, always be aware of why you need a personal loan.

    Knowing for what purpose you are getting a personal loan will shape your future finances accordingly.

    Market Rate

    Getting a personal loan is easy but whether you are getting it at a good rate is a tricky business. While it is true your credit score plays an important part here. But it can also be the case that different lenders may offer the loan at different rates irrespective of your credit score. Hence, knowing the average market rate is important if you do not want to pay extra on your personal loan.

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    Credit Score

    Make sure that your credit score is above 700 while applying for a personal loan. The better your credit score the better will be the rates and offers at which you will get the loan. You should keep in mind to check your credit score prior to getting a loan so that the right decision can be made.

    Repayment Structure

    It is quite apparent that you should not borrow more than what is necessary. But another thing that matters here is the monthly instalments you will have to pay for the loan. You should structure your loan payment module in such a way that the Equated Monthly Instalments or EMI to be paid each month falls within your budget.

    To do this, you will have to assess your monthly income and how much percentage of it you can dispense with for the interest amount. You can use a personal loan calculator to help you in calculating the EMI based on the principal amount of the loan and its tenure.

    It is recommended that you keep your EMI payment structure in such a way that if at some point the payment fails, you can adjust the gaps.

    The Tenure

    Knowing beforehand the length of time for which you will take the personal loan also plays a key role in your overall budget. With the help of the personal loan calculator, you can compute different loan amounts as well the EMIs to be paid for a specific tenure.

    The simple mathematical rule of deciding on the tenure is that if you choose a shorter duration, the EMI to be paid will be higher. On the other hand, if you choose a longer duration the EMI amount will be less.

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    Here comes the tricky part, if you choose a longer tenure, though the EMI will be less the interest amount to be paid will be higher. So the decision rests with you regarding which tenure to choose. 

    Additional Costs

    While applying for a personal loan there are many other additional costs involved. These include processing fee, late payment fee, prepayment fee, etc. If you are applying for a loan with the help of an app in this case the best personal loan app would be the one that charges the lowest additional costs.

    There is no point in getting a loan at a low-interest rate if the additional costs involved are much higher.

    Multiple Applications

    If you are applying for a personal loan do not apply at too many places at once. You may think by doing so you will have a better opportunity of getting a personal loan at the best rates. But this is not at all the case. By applying at multiple places, your credit score gets affected. It gets reduced with each application for a loan. So the more places you apply for a loan the lower will be your credit score and eventually your chances of getting a loan at the best rates will be marred.

    By keeping all these points in mind you will know why and which personal loan option to go for. There will be many lenders in the market luring you with what they call “the best personal loan app”. But you should know better than that. The rule here would be to first research and only then apply.