New Delhi. Sometimes a message flashes on your mobile – Congratulations! You are eligible for a pre-approved personal loan. Documentless, hassle free and money in minutes. This deal sounds like a discount offer. But the question arises that the loan which looks cheap, is it really cheap? Are there high fees, penalties and strict rules hidden behind the low EMI in the offer? Therefore, before taking a pre-approved loan, definitely check these 5 things, otherwise an easy loan can prove to be heavy on your pocket.
1. Understand not only the interest rate but also its type
Do check the interest rate, but also check whether the rate is fixed for the entire period or is subject to change. Often people only look at the EMI, whereas a slightly higher rate in 2 to 5 years increases the total payment significantly. Remember that it is not necessary that you will get the rate shown in the advertisement. It depends on your credit score, income and old loan.
2. How much amount will come into the account after deducting the fees
Processing fees, insurance or other charges directly reduce the amount you receive. EMI of two loans may be same, but one may have higher deduction. Ask clearly how much money will come to my account?
3. Rules of Prepayment and Foreclosure
Often people do not complete the full tenure. Loans are closed early after bonus, job change or re-financing. In such a situation, check whether part-prepayment is allowed or not, whether there is any lock-in period and what is the foreclosure charge. A loan with slightly higher rate but easy prepayment often proves to be cheaper.
4. EMI, Tenure and Flexibility
Low EMI sounds good, but it can also mean longer tenure and higher interest. Not just EMI, also see how much total money has to be paid. Also know whether you can change the EMI date if needed, reduce the tenure or not and whether you can make additional payments without any hassle or not.
5. Penalty and behavior of the lender
Sometimes EMI may be missed due to technical reasons. Some lenders charge heavy bounce charges and report them quickly to the credit bureaus. Be sure to check the penalty for late payment and the image of customer service. A personal loan is a relationship for a few years, so choose a less stressful option.
easy way to compare
Take two-three shortlisted offers and write down four things – net amount in the account, EMI, total payment and foreclosure charges after 12 months. With this the correct option will automatically become clear.
