However, one thing that can get in the way of achieving one’s dreams is the enormous financial burden that comes with living in the city.
Expenses such as rent are significantly higher than that of rent in other cities, especially Tier 2 and Tier 3 cities. Other expenses such as food, travel and basic entertainment costs can also rack up a huge cost. It doesn’t help if you earn a modest salary since just basic living expenses can eat up these costs.
Imagine in case an emergency situation arose for which you are not able to borrow money from your friends and family to help solve. As a result, you can end up in a lot of stress if you also lack the emergency savings required to deal with them.
This is why getting a personal loan has become an excellent way for people to meet their required expenses, especially if they lack the financial support they need. Since the last several years, the process of getting a loan has become highly simplified- without the long queues in the bank and even longer waiting time.
If you’re a Mumbai resident and are in need of a loan, look no further! We’ll go over the ways that you can get a personal loan, and how to choose the best lender for your requirements.
1- Know the different types of loans available
There are many types of personal loan in Mumbai available, the two main ones being secured loans and unsecured loans. The meaning of a secured loan is when a borrower pledges their own assets as security against the loan they take out. This is known as collateral. The kind of collateral required to avail a loan can include assets such as real estate, jewellery, shares, etc.
The lender holds on to this collateral until the borrower repays the loan entirely along with interest. If the borrower defaults on repaying the loan, the lender can seize the assets in lieu of the loan.
On the other hand, unsecured loans do not need collateral in order to avail the loan. Digital lenders that provide loans online generally offer unsecured loans that require very minimal documentation and have a completely digital application process.
Even though secured loans come with a slightly lower interest rate than unsecured loans, the main disadvantage is that most people do not have the required amount of collateral saved in order to avail the loan in the first place. Second, arranging the collateral and submitting it to the lender can be a huge hassle. Therefore, if you’re looking for a quick loan, it’s better to go for an unsecured loan over a secured loan.
2- Check the eligibility criteria
Lenders have a set of basic eligibility criteria which applicants must meet in order to qualify for a loan. This includes parameters such as age, income, location, and credit score.
If you apply for a loan from a lender without checking their eligibility criteria, you may not realize that you actually do not qualify for a loan; as a result, your loan application will get rejected immediately. Therefore, make sure to check the eligibility of criteria of the lenders before you apply to them.
Once you’ve figured out the lenders whose criteria you meet, only narrow down to about 2-3 lenders. This is because every time you apply for a loan, it gets recorded in your credit history. If you make numerous loan applications in a short span of time, lenders will perceive you as a credit-hungry borrower and will be more likely to reject your loan.
3- Know all the fees involved
Interest rate is just one of the fees involved when taking a personal loan. There are processing fees, late payment fees, foreclosure charges, and GST. It’s important to know these fees involved as they will vary from lender to lender. Generally, 2-3% is charged as a processing fee by most lenders.
4- Consider All Factors
Most people who want to take a personal loan in Mumbai generally decide which loan offer to choose from on the basis of which lender is providing the lowest interest rate. This mentality is that the lower interest rate will help save money to be repaid on the loan. However, this is not the best way to base your decision.
Whether you are taking a loan for the first time or not, the main point you want to focus on is whether the loan EMI is low enough to fit in your monthly budget. Ensuring that the EMI can be easily accommodated as per your current finances will ensure that you don’t default on repayments.
If you take a loan with a longer tenure, you can bring down your EMI. Suppose you take a loan of Rs. 1 lakh with an annual interest rate of 18%. By choosing a repayment tenure of 24 months, your monthly EMI will amount to Rs. 4,992.
With the same loan amount and interest rate, the EMI will jump to Rs. 9,168 when taken on a tenure of 12 months. Compared to the first example, this is a whopping 83% increase in the EMI amount, which makes it a larger financial burden.
Even if the interest rate is higher on the loan amount that you want to avail, you can always go for a longer repayment tenure to bring down the monthly EMI amount. Do keep in mind that your consistent timely repayments has the largest impact on your credit score, which in turn will determine your eligibility for loans in the future.
If you want to apply for a personal loan, remember to first get all your finances in order. This includes knowing exactly how much you need to borrow (and comfortably repay), checking your CIBIL score, and keeping common KYC documents available for the application process. Via some lenders, you can get a loan up to Rs. 2,00,000 disbursed to your account in just 48 hours or less. You can visit here for more information on how to avail a personal loan in Mumbai!