Is your child looking to apply for a personal loan? Are you afraid they might not have the required information? As a parent, you have every right to worry. After all, even if personal finance is a viable option, it is still debt.
So, who better to educate your child about the loan than you? Here are a few things to inform your child about taking their first personal loan.
1. Look for the right lender
Since several lenders today offer attractive terms and offers on personal loans, choosing the right one will require you to shop around and compare. While you are bombarded with choices and recommendations from friends, it is best to conduct your own research online. This will help you find a lender who offers an affordable loan at attractive rates.
Additionally, you must also consider the loan terms, interest rates, personal loan eligibility, and flexibility of repayment offered by the lender to arrive at a well-informed decision.
2. Consider your affordability
Analyse your monthly expenses and your financial requirements to determine the loan amount. Since every cost associated with a loan, including your interest rate, EMI payments, processing charges, etc., depends on the principal amount you take, you must consider your affordability beforehand. Then, you can avoid unnecessary borrowing and also manage your finances better.
Additional Read – First Time Personal Loan Applicant: Things to Consider
3. Check your credit score
Does your credit score meet the lender’s criteria? Every lender evaluates your creditworthiness and repayment capacity through your credit score. So, a good credit score gives you an upper hand in the loan process.
It can also fetch you favourable loan terms and reasonable personal loan interest rates along with instant approval. So, you must keep a check on your credit score before applying.
4. Choose a suitable tenure
Your loan repayment tenure is a factor that impacts your monthly EMI payments. While longer tenure can lower your EMI, you will have to pay a higher interest rate. Whereas, your EMI will be higher for a shorter term, but you can get debt-free sooner. That’s a dilemma every borrower faces.
The best way to decide is to assess your repayment capacity and opt for a tenure where you can pay the EMI comfortably without the risk of default. If you’re still unsure, a personal loan EMI calculator can help you get an idea of your payments.
5. Keep the documents handy
When you apply for a loan, the lender will require you to submit certain documents to verify your credentials. These documents include identity proof, address proof, bank statements, etc. So, keep all the necessary documents ready to ensure a smooth and hassle-free loan process.
Additional Read –How Not to Fall Prey to Hidden Charges of Personal Loans?
The bottom line
Applying for their first finance personal loan can be a daunting experience for your child. But not with us!
Tata Capital brings you multipurpose personal loans with a host of benefits and instant approval. Your child can enjoy flexible loan tenure, convenient EMI payments, and swift loan processing with our simple online application process.