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The 10 most commonly asked questions about loans
A loan, irrespective of the type, is almost always a long-term commitment that requires you to repay it along with interest on a monthly basis in the form of EMIs. These loan EMIs can significantly impact your financial situation if you have not planned for it in the right manner.
So, it is extremely crucial to cover all your bases first before getting into such a commitment. But then, how do you ensure that you do that? It’s simple. By asking yourself and the financial institution from where you’re looking to borrow all the right questions. And that’s what we’re going to be looking at in this chapter.
What are the most commonly asked loan questions?
In this section, we’ll be covering generic loan questions that you can ask irrespective of the kind of loan that you opt for. In addition to that, we’ll also be focusing on a few home loan questions and bank loan questions as well. Let’s begin.
How much money should I borrow?
This is arguably one of the most important loan questions that you should first ask yourself. Accurately determining the amount of loan that you need is the first step towards getting a loan. This will ensure that you don’t fall short of funds even after you’ve taken out a loan.
Here’s a tip that you can use. When determining just how much you would have to borrow, make sure to inflate the figure that you arrive at by at least 5 to 10%. This will help cover for any additional and unplanned expenses.
What is the maximum home loan that I am eligible for?
When it comes to home loan questions, this one should be right at the top. It is important to first find out the maximum amount of home loan that you’re eligible for before starting the process of finding the right home for yourself within the budget. Especially since the maximum amount of home loan that you’re eligible for tends to vary from one financial institution to the other.
Is a co-applicant necessary for getting a home loan?
Some lenders may insist on getting a co-applicant onboard when applying for a home loan. This is usually done to reduce the risk of default on loan repayments. Usually, co-applicants are insisted upon only when you don’t fully qualify for a home loan. However, lenders may require one if the amount of home loan is too large as well. So, make sure to ask this question.
What is the eligibility criteria for availing a loan?
Again, this is another one of the generic loan questions that you should never forget to ask your financial institution. Especially since the eligibility criteria tends to vary wildly depending on the kind of loan that you’re opting for. For instance, the eligibility criteria for personal loans tend to be relaxed, whereas for home loans, they can be quite stringent.
What do I need to submit to avail a loan?
Every loan requires you to submit a set of supporting documents along with the application form. However, depending on the loan and the financial institution, the documents that you’re required to submit may vary slightly. Therefore, this is another one of the most important loan questions that you must absolutely ask.
What is the interest rate on the loan?
The interest rate is one of the most important metrics of a loan. It has the capacity to either increase or decrease the amount of monthly EMIs that you would have to pay. Also, it is always better to get to know the interest rate before you go ahead with a loan. This way, you will be in a better position to compare and contrast different loan offers with multiple institutions.
What would be the monthly EMI?
In addition to the interest rate, also make sure to ask the financial institution to provide you with a loan amortization schedule. This schedule is essentially a statement detailing the exact amount of monthly EMI that you would have to pay towards the loan, including the principal and interest payments for each month till the end of the loan tenure.
Are there any other fees associated with the loan?
Many lenders levy additional fees and charges like processing fees and verification charges for availing a loan with them. That’s not all. Some of them might even levy prepayment, part payment, and foreclosure charges as well. Getting to know the entire schedule of fees and charges is extremely crucial since it allows you to make informed decisions.
How soon can I get the loan?
The time it takes to process your loan application and get the funds disbursed to you can vary from one lender to another. It can also vary depending on the kind of loan that you opt for. For instance, personal loans are usually processed and disbursed to you within 24 to 48 hours, whereas home loans can take up to a week or even more than that.
How will the loan affect my credit score?
Not all loans have the same impact on your credit score. For instance, secured loans don’t affect your credit score as much as unsecured loans do. However, it is a good idea to have a mix of both kinds of loans. That said, having too many unsecured loans on your hands can bring down your credit score. So, it is important to ask your lender about the kind of impact the loan is likely to have on your credit score.
With this, we’re done with yet another chapter. You should now be aware of the kind of loan questions that you should ask yourself and your financial institution when dealing with loans. In the next chapter, we’ll see how you can get a lower loan interest rate.
A quick recap
- Accurately determining the amount of loan that you need is the first step towards getting a loan.
- The maximum amount of home loan that you’re eligible for tends to vary from one financial institution to the other.
- Always get to know the interest rate before you go ahead with a loan.
- Many lenders levy additional fees and charges like processing fees and verification charges for availing a loan with them.
- Personal loans are usually processed and disbursed within 24 to 48 hours, whereas home loans can take up to a week or even more than that.
- Secured loans don’t affect your credit score as much as unsecured loans.
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