If you’ve never availed any financing options, the terms of a quick loan might seem difficult to grasp. So, here’s a brief lowdown on some of the common terms you’ll find a quick loan agreement.
Also known as the annual percentage rate, APR refers to the total amount you’ll need to pay for borrowing money. The rate includes both the processing fees and the interest rate of a loan. That is why, before borrowing funds check the APR to gauge the total charges you’re likely to incur.
This is the process via which third parties like lenders access your bank account for withdrawing the installment amount. You can set up the auto-payment feature to ensure a timely repayment. This also eliminates the possibility of incurring late charges.
A co-signer is an individual who accepts the legal liability of paying the monthly installments with you. If your credit score, income, and other qualifications aren’t as good, you may not manage to secure the financing option you want. In situations like this, you can apply for the loan with a co-signer. The co-signer needs to have an excellent credit rating to qualify for this arrangement.
While many people interchangeably use the terms guarantor and cosigner, they are not always the same. Unlike the co-signer, who agrees to pay the monthly installments, a guarantor is a person who guarantees your creditworthiness to the lender. If you fail to repay the loan at any instance, the lending institution will have the authority to get the funds from the guarantor.
As evident from the name, your credit report is a document that features an entire list of your debt obligations, payments, and everything in between. Negative details like collection accounts, legal judgments, late charges, are reflected in this report. These instances also take a toll on your credit score. As of now, CIBIL is one of the primary credit bureaus that maintain the credit records of Indian consumers.
Debt to Income Ratio
Also known as the credit utilization ratio, the debt to income ratio lists all monthly debt obligations against your income. The obligations include (but aren’t limited to) mortgage payments, room rent, auto loan payment, student loan payment, personal loan installment and more. Most lenders will readily approve your application if your debt to income ratio falls below 30%. If the ratio is higher than this percentage, your quick loan approval charges are slim. That is why it is best to pay off your existing debts before applying for a new instant loan.
Default refers to the instance when you fail to pay back on your personal loan or any other financing option. If you default on a loan, the lender is authorized to take legal action against you in a bid to collect the balance amount. They can send your details to collection agencies or even sue you.
Now that you’re familiar with the common quick loan terms, apply for your new quick loan right away!