Now that you have read the benefits of a travel loan, you may be ready to visit your nearest financial institution for a loan, right? Well, you will still have to wait before you can go to get a loan for your dream vacation. Before opting for it, here are some things you should keep in mind:
1.Check your existing finances
Before you opt for a personal loan, do check your current financial situation. Do you already have a number of loans or mortgages to pay off? Will your current salary help you meet the monthly payments? Do you have a good credit score? Financial institutes keep a track of all this and more to ensure that you will be able to repay the loan.
2.Only ask for the amount you need
While it is very easy to get a loan, you should remember that higher the loan amount, more the interest rate. This will also lead to a higher repayment amount. Hence, only opt for the amount you need and don’t go for any extra amount.
3.Find out the interest rates
For loans up to INR 25,00,000, the interest rates may range from 11 percent to 21 percent. The interest rate is determined by financial institutions based on:
• Your profession
• Current salary
• Income stability
• Work experience and company category
• Existing loans and EMIs
• Credit score
Based on the interest rate, you will be able to calculate your EMI. As a borrower, it is important that you try to get a reasonably lower interest rate.
4.Know the term period
Check the term period. Depending upon it, you will be able to calculate how much you need to pay in installments every month or year.
5.Ensure that you have all the documents ready
Before you go in for a loan, find out the required documents and other formalities needed. Some of these include:
• Mode of repayment
• Guarantor or security collateral
• Documents declaring your source of income, identity proof, travel plans, and others
6.Read the loan agreement details carefully
Always read the loan agreement properly before signing. That way you will know of all the fees, charges, as well as penalties you may be subjected to and will not be caught off-guard.
7.Know the deferment process
There may come a time when you may not be able to pay back your loan on time or miss an installment. A number of situations could lead to a cash crunch like a loss of job, financial emergency, or anything else. Knowing the deferment process will help you handle as well as be prepared for such a situation.
If you want to splurge on your holiday and make the most of it with a travel loan, then do stay tuned for the next article on “5 Expensive Experiences that are Worth the Money You Spend” and get ready for a lavish escapade.