5 things to consider when applying for a personal loan

In short, personal loan is the money you borrow from the financial institution with the agreed interest rate you pay within a certain period. Those who apply for personal financing use loan money for things such as a capital for married, buy a new car, pay the PTPTN debt, travel, and so on. Why are personal loans appealing to so many? Personal loans offer low interest rates for consumers with good credit, and they are generally smaller loan amounts than other types of loans. Here’s the 5 things to consider before applying personal loan.

personal loan

Types of Loans

Getting a personal loan is the same as choosing a suitable car to buy. Before making a decision, you need to do a thorough study first. You should know how to differentiate the types of loan such as personal loans, student loans, business loans, mortgages or equity loans.

Interest Rates

Basically, an interest rate is the amount charged on your full principal (the amount borrowed) over the loan period. Ideally, a personal loan that offers the lowest interest rate is the best to choose so you can focus on paying off the money you borrowed rather than extra interest. The type of loan will determine the interest rate.

Length of Loan Repayment Period

The repayment period, repayment amounts and the amount of interest you end up paying over the life of the loan depends on the type of personal loan approved, and the borrower may choose a repayment term that is appropriate to their financial situation. The longer the length of the loan, the lower your monthly repayments will be. Most personal loans can range from 1 to 7 years.

Credit History

Before applying for the loan, you should check your credit score in order to know the likely prospects of getting the loan sanctioned. Most importantly, if there are any pending credit card dues, then you should immediately pay them off as this will reflect in your credit history while your application is getting processed.

Penalty Charges

Penalties are charged by all banks. Often this amount is 1% of the loan amount. But there are banks that charge more. If you fail to repay your monthly loan at a fixed time, you may be charged late fees.

Keep in mind

When applying for a personal loan, be very clear of your goals and identify what you really want to achieve. Perhaps you want to renovate your home, or pay off your credit card bills? Always remember, a personal loan is a financial tool, not a cure-all to your financial problems. Make sure to plan your payment and be really good at handling it and don’t allow higher interest rates to drag you deeper into the debt. Get the best personal loan here with RHB with this link. https://www.rhbgroup.com/products-and-services/personal/loans/personal-financing

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