When applying for a personal loan from a bank or licensed moneylender, it is essential to review the repayment terms. Take note of the interest rate charged, credit score, repayment period, and other fees.
Note that different banks charge different interest rates on personal loans. You should ensure your bank’s rate is favourable and whether the bank is offering you a variable or fixed interest rate for the loan.
The repayment period for a personal loan determines how easy it would be to pay back the amount borrowed. Since you will depend on your monthly income to pay the loan, it is advisable to go for a personal loan that you can pay every month. The repayment period should be realistic and favourable to you and the bank. Do not spread the personal loan over an extended payment period in case your bank is charging a variable interest rate. This way, you can avoid paying more interest on the loan at the end of the repayment period. You should negotiate with your bank or moneylender for a favourable repayment method for the loan.
Whenever you take a personal loan from a bank or moneylender, you must ensure you can manage to pay the monthly instalments specified in the terms. Also, the repayment terms for a personal loan are all essential if you look forward to avoiding problems with your lender. The conditions must be favourable to both the borrower and the lender.
Your credit score determines the amount of money you get from a personal loan. In most cases, your moneylender or bank will refer to your credit score before they can issue any loan. In case you have a low or negative credit score, the bank may shy away from lending you. However, you can still access a co-sign personal loan by looking for a co-signer with a positive credit score.
Most lenders do not require collateral for a personal loan. This is a great benefit for borrowers because they will be able to have access to this type of loan without having to look for an asset to put up as security.
Apart from charging you a higher interest rate on personal loans, some banks can impose hefty penalties or fees in case of late payment. In most cases, the bank may force you to pay the principal amount plus the interest if you do not pay your monthly instalments on time. It is necessary to find out if your moneylender or bank will be charging you other fees on the personal loan.