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Tuesday, 20 July 2021

Things to do: Here are 6 things to keep in mind before applying for a personal loan:

 Things to do: Here are 6 things to keep in mind before applying for a personal loan:

Things to do: Here are 6 things to keep in mind before applying for a personal loan:

Many people take out a personal loan when they need money. It allows you to manage money when you suddenly need it. It does not require you to mortgage any property. However, before applying for a personal loan you should consider many aspects such as your CIBIL score and how much to borrow. Here are 6 things you should keep in mind before applying for a personal loan.

Don't borrow more than you need

Take out as many loans as you need. It is often the case that you are eligible for a higher loan amount than you need. In such a situation many people take out more loans than they need. Excessive borrowing affects your financial goals. Apart from that, if you do not repay the loan on time, you also have to pay a fine. Not only that, it also makes your Sibyl score worse. So you may have trouble getting a loan in the future.

Learn about interest rates

You should know about the interest rates before applying for any personal loan. Pay attention to the interest rates of all banks and NBFCs and apply where low interest loans are available. Apart from that you can also get information about pre-approved loans from the bank where you have your account. Banks also often offer pre-approved loans to their customers. This bank is giving loan at low interest rate ...

Bank interest rate (in%)

Union Bank 8.90

Central bank


IDBI 9.50

SBI 9.60

Bank of Baroda 10.00

HDFC 10.25

ICICI 10.50

Be aware of the Sibyl score

If your credit score or CIBIL score is good then you can get the benefit of it in personal loan. A good CIBIL score can lower your processing fees and interest rates. In addition, the bank usually lowers the interest rate in addition to waiving the processing fee of a customer with a good credit score. Sibyl scores between 750-900 are considered good. Also, if it is less than 750, you will get a loan at a higher interest rate. Other than that you may have trouble getting a loan. So keep an eye on your credit score.

See also processing fees and other charges

The bank always includes some hidden charges and processing fees in the personal loan, which the banker or agent avoids disclosing to the customer while taking the loan. Also know about the charges levied on pre-payment closure of the loan. That way you don't have to worry about it later.

Be aware of repayment capacity

Proper consideration should be given before choosing a loan term. The loan installment should be determined by looking at your ability. This is because not only will you have to pay a penalty for not paying the installment, but it will also have a bad effect on your Sibyl score. The person should try to settle the loan as soon as possible.

Take a loan from the respective bank

If you are thinking of taking a loan, take a loan from the same bank where you are taking your account, fixed deposit or credit card service. This is because the bank makes the loan available to its regular customer easily and at a reasonable interest rate.

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Personal loans do not have to be taxed

Personal loans are not taxable, as the loan amount is not considered income, but make sure your loan is taken from a legal source such as a bank or NBFC. However to avail tax exemption on the loan you have to show many documents. It includes documents like cost voucher, bank certificate, section letter and auditor's letter.

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