4 key steps to take before applying for a personal loan – Get the best deal | Mint

If you are contemplating applying for a personal loan, it is recommended to undergo the necessary steps before you opt for the loan. These include carrying out necessary research, comparing interest rates offered by different banks, submitting your application, and finally choosing the one which offers the best deal to you.

These are the four key steps to follow:

I. Do the necessary research: First of all, the borrower is supposed to carry out necessary research, which includes finalising the loan amount that you need as loan, exploring the banks and NBFCs that are reliable, factors you should be careful about, and so on and so forth. The preliminary research requires you to ask people around about their feedback.

II. Compare interest rates: The second important step to follow is to compare the interest rates offered by different banks. Generally reputable banks charge lower rates of interest whereas fintech and NBFCs charge a slightly higher interest rate.

As an applicant, you should first of all prepare a small list of banks and NBFCs that are charging an interest which you can afford.

III Apply for loans: Once you have a small ready list with you of the financial institutions where you can apply for personal loan, you need to make sure that you do not apply with them indiscriminately. It is recommended to apply for a select few only. Notably, applying for personal loan leads to a hard inquiry by credit information companies, or credit bureaus, which leads to the loss of credit score, albeit marginally.

IV. Choose the one that suits you the most: Finally, if you have an offer or two from the bank(s), you can obviously go for the bank or fintech which gives you the best loan offer. And this choice of bank should not necessarily depend only on the rate of interest but also on other factors such as its customer service, reputation, reviews of customers and your prior experience with your bank.

Disclaimer: Mint has a tie-up with fintechs for providing credit, you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.