A personal loan is a type of installment debt that allows you to borrow money for personal costs and repay it over a certain period. For example, a personal loan can be utilized to cover wedding expenditures, home repairs, vacation costs, medical bills, funeral costs, or any other unexpected needs. While there are numerous options for obtaining a personal loan, some are more straightforward than others. Before approving your loan, the lender will review your financial history to determine whether you will be able to repay it.
What to keep in mind while taking a personal loan without salary slip?
Though there are many ways to avail a personal loan without salary slip, one must always remain cautious and keep a few general things in mind such as:
● Choose your lender with the utmost caution
Even though it seems convenient to avail of your personal loan without salary slip from a bank where you already have a good relationship, you might miss out on more suitable deals if you zero down on an option quickly. Before availing of a personal loan without income proof, you must always research the market to find deals that are suitable to your own needs. The terms and conditions of funding and repayment vary from one lender to another, and therefore, you must choose your lender cautiously. NBFCs and banks carpet bomb potential customers through emails or SMS by claiming to offer the lowest rates in the market. By making use of loan aggregator tools or websites, it becomes easier to find the lowest rates so you can choose accordingly.
● Estimate the interest rate carefully
Banks have been infamous for financial jugglery since the beginning of time. Shining deals on personal loans without salary slips are often used to trick customers in need. The flat interest rate, for example, is one such deal. On the surface, it seems like a fair deal but it is a misleading metric that many fall for. While taking a loan without a salary slip, you must always ensure that the interest to be paid counts the reduction in the loan balance after every EMI you pay. In simple words, the interest ought to be calculated on the reducing loan balance, instead of the total amount. The flat rates, thus, do not reveal the true cost of the loan you are availing of.
● Don’t fall for interest-free loans
While online shopping or on the internet in general, you must have come across the idea of interest-free loans, which claim to lend money without any interest rate. Even though the RBI has shunned the 0% EMI schemes, some lenders still continue to offer such plans underhandedly. This is another example of the shining deals used by the lenders to trick customers into availing of a personal loan without salary slip. But what the customers fail to realize is that the lender is charging an exorbitant processing fee, which essentially means that you will end up paying interest on the borrowed funds one way or the other. If you purchase a TV for INR 25000 at an interest rate of 0% but pay a processing fee of 1000, you have paid a 14% interest already.
● Read the foreclosure rules carefully
Foreclosure penalties are the cost you have to pay if you choose to repay the entire loan before its tenure matures. In the given case, the lender loses the interest they had anticipated from the loan given to you, so they charge you a prepayment penalty to earn the interest they expected. Though the RBI has instructed the banks not to engage in such practices, many lenders still continue to do so. Thereby, if you expect a better cash flow in the future, check the foreclosure charges before availing of a loan and opt for the lender with the lowest prepayment penalty.
● Do not contact too many lenders at once
Although it is always a smart idea to shop around and research for the lowest interest rates and the best deals in the market, sometimes it can prove detrimental as well. When you apply for a personal loan without salary slip, your credit score is analyzed to determine your repayment ability. But if you contact too many lenders at the same time, it would build your reputation as a credit seeker, which will affect your credit score negatively. Therefore, a financially sensible way would be to use loan aggregator tools to find the most suitable loan without much hassle.
Applying for a personal loan without salary slip in case of an emergency can certainly be stressful, but there are many easy ways to get a loan approved quickly. With the plethora of sources available for personal loans, it gets exceedingly difficult to find the right deal. Since terms and conditions related to repayment, EMIs, prepayment penalties, and more vary from one lender to another, always keep the above-listed things in mind and research well while availing a personal loan without salary slip.
Read also: Financial care when taking out a loan