Lending in today’s market has turned very aggressive with Banks and NBFC’s giving amazing deals and instant loan approvals to lure customers into taking different loans. The same goes for personal loans. You can take an instant personal loan to go for a vacation, buy a high end smartphone, buy furniture for your home and many more. Hence it is called as a multipurpose loan. Before you could take any loan, it’s wise to check your personal loan eligibility, read the offers and understand it before you fall into this debt trap.
Let us explain this scenario in the form of a dialogue between Mr.Amit Kumar, a retired Banker and his son Vikas who just turned 25 and has begun his corporate career. Vikas rarely reads the newspaper but on Sunday he happened to browse through a full page advertisement by ABC bank giving an instant personal loan at 6.99% only with instant approval.
Vikas: Dad, did you see this ad by ABC Bank? They are giving an instant personal loan at such a lower rate!!
Amit: Show the ad to me son…
Amit reads the whole offer for a while and does his research. He also checks what the parameters for the personal loan eligibility are. While Vikas has already begun planning his next trip abroad by searching for good hotels in Bangkok. Later during the day;
Amit: Vikas, I have read everything about this amazing offer by ABC bank. But before you could apply for this instant personal loan, I have few questions for you. If you understand all the answers, then I’ll help you with the loan process.
Vikas – Yes, that would be great Papa. What are the questions?
Amit: Did you check your personal loan eligibility?
Vikas: Dad, I’m 25 and working. Isn’t that enough?
Amit: It is partly enough. Remember son, you need to check your personal loan eligibility first. Once you fulfill the eligibility, the bank can provide you with an instant personal loan.
Amit: Yes, do you know what your credit score is?
Vikas: My credit what??
Amit: Your credit score, son. This score determines how reliable you are and if you’ll be able to repay the loan without any default in the future.
Vikas: Oh no! I don’t know about that at all.
Amit: It’s a lengthy procedure to build and maintain a good credit score son. With the help of a good credit score, you can get a lot of benefits from the bank. This helps the bank to verify your personal loan eligibility.
Vikas – Papa, I must read more about this. Will you help me build a good credit score?
Amit: Sure son. I will help you. Before I could do those answer my next question; Are you aware about the processing charges and prepayment penalty fees?
Vikas: Dad, I am not aware about any of these charges. I mean why would the bank charge me a penalty if I want to prepay the personal loan? Isn’t that a good thing?
Amit: Ha ha… You really are a kid. If you prepay the loan early beta, then the bank loses the interest money that you would have paid for those months. Hence in order to not let that happen, they are allowed to add a penalty charge on prepaying loans.
Vikas: Oh my god, I did not know that the bank can be allowed to do this.
Amit: There are so many things you have to learn about this world beta. This is just a loan procedure. Anyway, let me ask you one last question.
Vikas – Papa, I already think that you will ask me a question of which I don’t have the answer.
Amit – Don’t feel so bad. I’m doing this for your own good. Now tell me, Did you read all the terms and conditions of this instant personal loan?
Vikas – Oh no, I haven’t even done that. Why is it so important to read that Papa? No one has the time to read such boring and lengthy pages. I don’t think I will even understand any of those words.
Amit: Son, all of these questions I just asked came from those boring terms and conditions only.
Vikas – Whattttt?
Amit: Yes, these so called boring terms have all of these hidden charges mentioned. You got floored by their low interest rate. But you did not realize that in this instant personal loan the processing charges, prepayment charges and other hidden charges will cost you more.
Vikas – Papa, I finally realize that all good and attractive looking things not necessarily have to be good. I need to check the personal loan eligibility first. Then I need to read the offer and their terms + conditions. After understanding all of this, I shall be more cautious before taking any decision in haste.
Amit: That’s like my good boy. Now, let’s just enjoy the rest of this holiday, shall we?
Vikas – Hehe, Surely Papa!
You can also read – Important mistakes to avoid prior to taking a personal loan
Hence in this conversation we can understand the importance of reading all the terms and conditions in the loan based ads. You must understand all the costing that you are bound to pay with the EMI. If you need help, all you have to do is visit our webpage www.Ruloans.com