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Personal Loan is a scheme that is offered for any personal financial requirement be it a vacation, purchasing a house, purchasing a vehicle, paying debts and many more. It is usually a short term loan that comes with flexible interest rates, depending upon the credit rating of the person. There are a few lenders that ask to put some security and some lenders lend money to people without demanding any collateral. Personal Loan is generally an unsecured loan that comes without collateral. It is the convenient option for the people who do not have any asset to put as collateral. It is a multi-purpose scheme that can be used to tackle any financial problem of life. Following are the few points that a person should keep in mind: 1. Do not borrow beyond your repayment capacity: There are few people who borrow more than they could return to the lender, but it is not the right decision as it can lead to the financial crisis. It becomes difficult to manage the daily expenses of life. It can also cause bad credit and eventually to a debt trap. So, the applicant should borrow the amount that he/she can pay at the given time without any default. 2. Check credit score: almost all the lender checks the credit score of the person before lending a sum of the amount. The person should check his/her credit score before approaching any lender. The minimum credit score required to qualify for a personal loan is 650. The lender may not lend money to a person that has poor credit score. 3. Do a market survey: The person should go through the deals offered by different lenders in the market. The person should check and compare the deals before selecting the right deal. There are various banks and firms that offer personal loan to the people at affordable interest rates. The person can apply for SBI Personal Loan which is available at the lowest interest rates in the market. 4. Read the documents properly: The person should not sign any document without reading each and every detail. The person should check the documents properly and make sure that everything is understood to him/her. 5. Choosing the EMI and loan tenure: The applicant should choose the repayment option according to the capability to pay it. The long term tenure usually has low EMI as compared to the short term loan. It is suggested to select a short term as it is more cost effective than a loan term loan.
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