 "Pre-approved loans are easy but customers must choose options cautiously")
Credit access has become easy as banks and other financial institutions offer pre-approved loans but financial advisors say consumers must be cautious to ensure financial stability.
“While it is true that too many options may confuse the borrower, the most important thing while choosing any loan is to stick with the fundamentals. Always check the interest rates, the processing fee, or any other hidden charges and assess the credibility of the lender,” said Gautam Sinha, chief executive officer of LTFlow, a division of LoanTap.
Here's how one should review a pre-approved loan:
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Understanding needs: Before diving into comparisons, it is crucial to assess your specific financial requirements. Determine the exact amount you need based on your purpose.
Comparing interest rates: Interest rates are a primary factor in deciding which loan to choose. They can vary significantly among lenders and can be influenced by your credit score and income level.
Processing fees: These vary from 0.5 per cent to 3 per cent of the loan amount. Some banks waive these fees for premium customers or during festive seasons.
Fine print: Every loan agreement comes with its own set of terms and conditions that dictate your obligations as a borrower. It is essential to read through these details carefully.
Prepayment penalties: Look for loans that allow partial or full prepayment without penalties. This flexibility can save significant money in the long run.
Tenure Options: Longer tenures mean lower EMIs but higher interest outgo. Shorter tenures have higher EMIs but lower overall costs.
“Taking a loan should always be a well-informed decision, with all the related aspects in mind. One must always analyse and choose the loan offer that aligns with their long-term financial goals and ensures manageable monthly payments,” said Sinha.