4 tips to keep in mind before applying for a Personal Loan

The Hindu

4 hours ago

When unexpected expenses pop up or a big opportunity calls, a personal loan can be a helpful financial solution. Whether it's funding a wedding, a home renovation, or urgent medical bills, a personal loan offers quick access to funds without the hassle of collateral. However, before you apply, there are some essential things to keep in mind to ensure you borrow smartly and avoid unnecessary stress.
Here are four must-know tips to help you make confident, well-informed decisions. Let's dive in:
1. Understand your loan purpose and amount
The first step before applying for a personal loan is to clearly identify why you need the money. Pinpointing your exact requirement will help you decide the right loan amount.
Borrowing more than necessary means paying more interest than needed, while borrowing too little might leave you scrambling for extra funds later. For example, if you're planning a wedding, list down all expected costs like venue, catering, and decorations. This will give you a clear budget and help you avoid surprises.
With a Bajaj Finserv Personal Loan, you can avail of up to Rs. 55 lakh, depending on your eligibility. Once you know your requirements, use the personal loan EMI calculator to estimate your monthly repayments. This easy-to-use tool lets you input the loan amount, tenure, and interest rate to calculate your EMI. Knowing this figure in advance helps you plan better and check whether the loan fits comfortably within your income
2. Compare interest rates and charges carefully
Interest rates on personal loans can vary widely depending on your creditworthiness and the lender's policies. While a lower interest rate means cheaper borrowing, it's also important to look at other charges.
Processing fees, prepayment penalties, late payment fees, and other related charges can add up. Therefore, it is essential to review all these details and understand the total cost of your loan. Always ask for a detailed cost breakdown from the lender before you sign any agreement.
3. Check your credit score before applying
Your credit score is a key factor that influences your personal loan application. A higher score not only boosts your chances of approval but also helps you qualify for lower interest rates — making your EMIs more affordable in the long run.
Before applying, take a few minutes to check your credit score through a trusted credit bureau. If it's below 685, consider improving it by clearing outstanding bills. A strong credit profile reflects financial discipline and gives you access to better loan terms.
Since personal loans are unsecured — meaning you don't need to pledge any collateral—lenders closely evaluate your creditworthiness. This includes assessing your credit score, monthly income, and job stability. To prepare well, it's important to review your current financial obligations, ensure you have a reliable source of income, and check your credit score in advance.
4. Assess your repayment capacity realistically
Before taking a personal loan, it's crucial to honestly evaluate your ability to repay. Borrowing without a clear repayment plan can lead to stress, default, or have a negative impact on your credit score.
Consider all your monthly expenses, including rent, groceries, EMIs on other loans, and lifestyle costs. Your EMI should ideally not exceed 30-40% of your monthly income to keep finances comfortable.
If your income is steady and predictable, you can opt for a longer tenure to reduce EMI amounts. However, longer tenures mean paying more interest overall. On the other hand, shorter tenures reduce total interest but increase monthly EMIs.
Using a personal loan EMI calculator can help you find the right balance between tenure and EMI that suits your budget.
Why choose Bajaj Finserv Personal Loan?
Once you've mapped out your borrowing needs, the next step is selecting the right lender with whom you will apply for the loan. Bajaj Finserv Personal Loan stands out with fast approvals, competitive interest rates, and flexible repayment options — making your borrowing experience simple and stress-free
Here's what makes Bajaj Finance a smart choice:
100% digital process: No need to step into a branch. From checking your eligibility to uploading documents, the entire process is online — no branch visits are needed.
No need to step into a branch. From checking your eligibility to uploading documents, the entire process is online — no branch visits are needed. Instant approval and disbursal: Once your application is approved, the loan amount can be disbursed directly into your bank account in just 24 hours*.
Once your application is approved, the loan amount can be disbursed directly into your bank account in just 24 hours*. Minimal documentation: Forget about paperwork. Uploading digital copies of your documents is all it takes.
Forget about paperwork. Uploading digital copies of your documents is all it takes. Flexible repayment tenure: You can choose a tenure ranging from 12 to 96 months.
You can choose a tenure ranging from 12 to 96 months. No collateral required: Unlike secured loans, personal loans do not require assets as security.
Taking a personal loan is a powerful financial tool when used responsibly. By understanding your loan purpose, checking your credit score, comparing interest rates and charges, and realistically assessing your repayment capacity, you set yourself up for a smooth borrowing experience. Remember, borrowing is not just about getting money quickly — it's about managing your finances wisely so you can meet your goals without added stress. Use tools like the personal loan EMI calculator to stay informed and plan your finances smartly. Lenders like Bajaj Finance make borrowing hassle-free by providing high-value personal loans that come with an easy online application process, quick disbursal facility and flexible repayment tenure options.
Start your personal loan journey today with confidence and clarity — because smart borrowing makes all the difference.
*Terms and conditions apply
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