Living in the city of dreams, Mumbai, can be tough on your purse strings. However, there is nothing you cannot solve with personal finance. From financing a foreign vacation to arranging funds for a down payment, a loan for personal use has you covered.
So, if you’re looking for ways to find attractive loan offers, you’re in the right place. Here are five things to keep in mind before applying for a personal loan in Mumbai.
1. Understand the eligibility criteria in detail
While most financial institutions in Mumbai follow similar personal loan eligibility criteria, there may be slight differences in the terms and conditions. Typically, lenders will consider your monthly income, age, employment stability, personal liability, etc.
So the first thing you should do is check the eligibility criteria and see if you meet the requirements to qualify for a loan.
2. Check interest rates and other charges
When comparing personal loan lenders in Mumbai, there are a few factors you should put first. Of those, the rate of interest is probably number one. Because it will tell you the real cost of borrowing the loan. The lower the interest rate, the lower the EMI amount. In fact, even a decimal point difference can save you a considerable sum on the EMI outgo.
You should also consider the various charges levied on loans, like processing fees, late payment fees, prepayment charges, etc. They can help you choose a better offer from the ones available. Here are the different charges you must look out for before applying for a personal loan in Mumbai-
Processing Fee
When you apply for an instant loan in Mumbai or anywhere in the country, the lender will charge you a processing fee. This fee covers the administration costs and ranges between 0.5 and 2.50% depending on the lender. However, you must note that the processing fee is non-refundable. This means that even if the lender rejects your loan application, you will have to bear the processing fee.
Penalty on late EMI payment
When you take a personal loan in Mumbai, you must repay the principal and interest amounts timely throughout the loan tenure. But if for any reason, you fail to do so, the lender will levy a late payment penalty.
Loan prepayment or foreclosure penalty
You might get access to a large sum of money and decide to prepay your personal loan in Mumbai in part or full. While this is an excellent way to repay your loan quickly, you will have to bear part-prepayment or loan foreclosure charges. These charges usually range from 2%-4% and vary from lender to lender.
Besides these charges, there might also be other charges like GST, verification charges, fees for duplicate statements, etc. varying from lender to lender. Therefore, you must carefully read all documents before applying for an instant loan in Mumbai.
3. A high CIBIL score is ideal
Since personal loan are not backed by collateral, they tend to hold more risk. So lenders use your CIBIL or credit score to assess your debt management ability and loan suitability. The higher your CIBIL score is, the attractive the terms on your loan. You can qualify for a longer repayment period, lower interest rates, or a higher loan amount with a score of 750 or above.
On the flip side, if your score is on the lower end, you may not get attractive offers, or worse, a quick approval.
4. You may qualify for a higher loan amount
If you have a spotless credit history and a high CIBIL score, you may end up qualifying for a higher loan amount. However, you should not borrow more than necessary.
To keep your EMI obligations under budget, it’s better to estimate the costs beforehand and apply them accordingly. You can use a personal loan EMI calculator to try out different combinations of loan terms and estimate the most suitable repayment plan. Just remember — your EMI obligations should only comprise 40% or less of your total disposable income.
5. Don’t file too many applications together
In our desperation, we may think of applying for a loan with as many lenders as possible. However, you shouldn’t!
Simultaneously applying for multiple loans can leave too many hard enquiries in your credit report. Lenders may assume you carry higher credit risk. Which, in turn, can hurt your chances of approval. Thus, it is better to shop around and find the best product for your needs before taking the leap.
Final word
Last but not least, you should always go for a trusted financier. If you’re looking for one, your search ends with Tata Capital. We offer some of the lowest personal loan interest rates in the market. That too without collateral and minimal documentation. So wait no more. Apply for an online personal loan in Mumbai today.
08 April 2022
5 mins read
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