Before applying for a personal loan, ask these 3 questions to the bank...otherwise, you will face problems later.

You can spend the amount of a personal loan anywhere. But if you go to take a personal loan, then definitely ask 3 questions about the bank, otherwise, you will have to face problems later.

A personal loan is a loan that comes in handy when you are in dire need of money and you are not able to get that help even from your close ones. This is the reason why a personal loan is also called an emergency loan. You can spend the amount of a personal loan anywhere. But if you go to take a personal loan, then definitely ask 3 questions about the bank, otherwise, you will have to face problems later.

Fixed or floating interest rate?

Before taking a personal loan, ask the bank whether the interest rate on your loan will be fixed or flexible. Fixed interest rate is the one which is decided at the time of taking the loan and it remains the same during the entire loan period. Floating interest rate is the one that changes when RBI changes the repo rate. The biggest advantage of a floating interest rate is that if the repo rate decreases, the interest rate decreases. But it increases when the repo rate increases. Repo rate does not affect fixed interest, it remains the same throughout the loan period.

Loan tenure

Before taking a personal loan, know about the loan tenure from your lender, what is the maximum and minimum tenure of repaying the loan? Usually the tenure of a personal loan ranges from 6 months to 8 years, although some lenders can extend it to 10 years or more. The tenure depends on factors such as loan amount, interest rate and borrower's creditworthiness.

Fees and charges

Be sure to ask about prepayment and processing charges and other types of fees for personal loan. Many banks and NBFC companies levy prepayment charges on repayment of personal loan before the stipulated period. If you know about the prepayment charges in advance, it will be easier for you.