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Ask Yourself These 4 Questions Before Taking Out a Private Loan

When you talk about private loans, these are loans that a private organization or individual offers you instead of a bank or lending institutions. These private individuals can be very wealthy and may be looking for a good return on their investment. The private organizations also fall outside the purview of the banking and financial services industry and are calledu00a0private loan companies.u00a0 Suppose youu2019re unsuccessful in applying for a personal loan from a bank, NBFC, or other lending institution.

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Ask Yourself These 4 Questions Before Taking Out a Private Loan

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  1. Ask Yourself These 4 Questions Before Taking Out a Private Loan

  2. When you talk about private loans, these are loans that a private organization or individual offers you instead of a bank or lending institutions. These private individuals can be very wealthy and may be looking for a good return on their investment. The private organizations also fall outside the purview of the banking and financial services industry and are called private loan companies.  Suppose you’re unsuccessful in applying for a personal loan from a bank, NBFC, or other lending institution. In that case, you can try applying for a private loan. But what factors should you consider before applying for one? Well, they are no different than the points you’d think of while viewing a personal loan. Here are four questions you should ask yourself before taking a private loan. Read on!

  3. 1.How Much do I Need? Like in the case of a personal loan, this is the first step in choosing a suitable private loan. The amount of money you need influences your lender as well – whether it’s going to be a private loan company or an individual. It’s a good practice to consider all your financial needs and come up with an exact figure. Don’t borrow a little more than usual, just in case. This is because, private or personal, a loan is still a liability that accrues interest. Why pay extra interest unnecessarily? For example, if you need ₹50,000 for a medical emergency and you can only spare ₹5,000 from your savings, take a private loan of only ₹45,000.

  4. 2.What’s the Interest Rate Like? Whether it’s a private loan or a personal one, the interest rate is one of the most (if not the most) essential factor borrowers look at while choosing their lender. The interest rate a private loan company offers you will help you understand whether it’s affordable for you or not. For example, take the help of online aggregator websites. They will show you the personal loan interest rates of all the major lenders in India, along with the loan amount next to it. Do your research and choose a private loan company that offers you the amount you’re for at an affordable interest rate as well.

  5. 3.Do I Have the Capacity to Repay? Before taking out a private loan, you need to ensure you have the required repayment capacity for it by looking at your monthly EMIs. The private loan company or individual you’re borrowing from will surely give you a picture of how your monthly EMIs will look like. This is after mutually agreeing upon a repayment tenure that works for both of you. Knowing this, you should be able to pay your EMIs without affecting your other vital payments such as your rent, utilities, food, transport, etc. If you find out that you can’t afford to take out a private loan, it’s best if you don’t.

  6. 4.Are There Any Fees? Depending on your private loan company, you may have to pay other fees like a processing fee or a one-time onboarding fee. It’s a good idea to get a clear understanding of all the fees/charges involved so that there are no unpleasant surprises while applying for the loan.

  7. In Conclusion If you factor in the four points mentioned above while making your decision, you’ll be fine. While taking out a private loan (or any loan for that matter), please remember to avoid borrowing money for the sake of it. In the absence of a clear loan purpose, stay away from private loans or personal loans.

  8. Thanks For Visit. • Address for Correspondence:  • KreditBee, 3rd floor, The Royal Stone Park, No. 100, Above Honda Showroom, Sakshi Nagar, Pai Layout, BenniganaHalli, Karnataka 560016  Official Phone: 080-44292200 • Website : www.kreditbee.inOfficial Email Address: help@kreditbee.in 

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