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Do's and don'ts when applying for a personal loan online

Deep Shah
Do's and don'ts when applying for a personal loan online

In today's fast-paced lifestyle, people often end up spending more than their monthly income, thus falling into the debt trap. Being in debt to friends, family, or even credit card debt makes you ineligible to take care of a financial emergency. In these moments, getting a personal loan is a good way to meet any type of financial need. Whether you need money to pay off credit card debt or to renovate your home or even to take care of a medical emergency, a personal loan can be used for any purpose. However, when getting a personal loan, it is imperative to keep a few things in mind when applying for a personal loan online

Here is a list of dos and don'ts: 


Do: compare and investigate: 

Don't be fooled by the first offer you receive via email or SMS. Buy the best personal loan offer online by comparing and researching interest rates and more. While it's very convenient to get a loan from the bank you have an existing relationship with, it's still advisable to do some research online as various NBFCs and direct sales agents can help you get the best deal. 

Don’t – Ignore your credit score


When applying for a personal loan, be sure to check your credit score, as your score determines your creditworthiness. Having a low credit score can result in your application being rejected immediately, while having a high score can help you get the loan at a low interest rate. The score ranges from 300 to 900, where 900 is the highest and 300 is the lowest. It is imperative that you check your credit score before applying for a loan, as loan denials can further lead to a lower score. 

Do: Calculate the interest rate 

When you take out a personal loan, check if you are getting a variable or fixed rate loan. The fixed interest rate ensures that the EMI of the loan remains the same throughout the life of the loan, while with the floating rate the interest rate varies depending on the market scenario. Therefore, always calculate the total interest you would pay on the loan and choose the type of interest rate that fits your financial plan.



Do: check your personal loan eligibility


To make sure your loan application is not denied, you can check your personal loan eligibility online using a personal loan eligibility calculator. The calculator helps you determine loan eligibility by factoring in things like your monthly income, employer name, location, and other details. Using a personal loan eligibility calculator helps you get an idea of ​​the loan amount you could receive. 

Don’t : make too many applications 

Looking for the best interest rates for personal loans online can be a good idea. But applying too many can take a toll on your credit score. Approaching too many lenders reflects your credit hungry behavior which can lead to loan rejection.



Do: check foreclosure fees


In the event of early repayment or partial payment of the loan, banks charge a fee known as foreclosure charges. These fees are levied as lenders miss out on the opportunity to earn the interest they would have earned on the deal. Choose a lender that has low or no foreclosure fees. 


A personal loan can get you out of financial emergencies that could otherwise lead to disaster. Follow the dos and don'ts above when applying for a personal loan in India. 

Deep Shah
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