Preparations before availing of any Loan

It is a good idea to take in mind all the factors that will affect the loan. And check whether or not they fit according to your needs and requirements. 

The factors are mentioned below: 

• Loan Amount:- There are a lot of banks that have different limits to the loan amount. Some only provide a certain loan for INR 15 lakhs, whereas some provide it till INR 25 lakhs. So the loan amount differs from bank to bank. But be sure only to take the amount that will be easier for you to repay. Some banks provide an extra amount than what you need, so don't fall for that and only take the amount you need. Because if you're unable to pay the loan amount along with the interest rate, then your asset will be seized, or it will negatively affect your credit score.
  
  
• Capacity:- Check your budget capacity along with your monthly or annual income to confirm that you'll be able to repay the amount along with the interest within the loan tenure. You can use tools like an EMI calculator to check whether or not you'll be able to pay the loan amount in instalments. The repayment amount is usually 60% of your monthly income. So check whether you'll be able to cover other expenses like child's education fee, utility bills, ration and miscellaneous expenses after deducting the EMI amount.
  
  
• Budget:- It is an essential factor to check your monthly income. And whether you'll be able to pay other expenses after deducting the EMI instalment. And you can't miss a single EMI instalment because you'll have to pay an additional fee if you do that. So it's advisable to plan your budget accordingly, deduct unnecessary expenses, and follow strict spending until your loan is completely paid off.
  
  
• Credit Score:- If you're applying for an unsecured loan, then you'll have to maintain your credit score. It is usually a range of numbers between 300-900 that describes your creditworthiness. The minimum credit score accepted is 750, but if your credit score is above 850, then you can get many benefits like discounts on interest rates, charges or fees. But if your credit score is low, then either the bank will reject your application, or they will charge you with a high-interest rate. So it's better to maintain your credit score.
  
  
• EMI:- There are a lot of EMI options available in the market. And each EMI option is designed for different individuals. The EMI is calculated according to your loan amount, interest rate and loan tenure. The EMI charged by the bank does not exceed 60% of your monthly income. But it usually differs from bank to bank. You can calculate the EMI you'll have to pay in advance using some online tools like a car loan EMI calculator. Some banks allow you to make a down payment, so you'll have to pay less loan amount by doing this. So if you pay a high amount of down payment, then the monthly EMI you'll pay will automatically decrease.
  
  
• Charges:- There are a lot of charges that are charged by the banks apart from the interest rate or loan amount. There are charges like foreclosure charges or application charges which can be avoided if you choose a suitable bank. Some banks don't charge these, whereas others do. So you'll have to do perfect research where you find out about the banks that will provide you with the loan you want at a low-interest rate and charges. There are certain charges that can also be avoided if you repay the loan amount on time along with interest.
  
  
• Terms and conditions:- Read all the terms and conditions stated by the bank carefully. Don't sign any papers until you're fully aware of the content that's on that paper. 

Conclusion: There are certain loan agencies that help you compare banks and choose the best one according to your need and requirement. They also help you throughout the loan application process; it's their job to make sure that you're familiar with all the terms and conditions before signing the document.

Also Read:- Banks featuring different type of loans