6 Things to Know Before You Apply for a Personal Loans

Suggested as the easiest way to get money online personal loans may be a tough cookie. Interest rates, credit score, repay period, collateral, etc. All of these things might warn you of getting money online. Indeed, the first loan is frightening, as people in Sri Lanka still don’t believe in the online lending services. This article will show you how to use this modern and convenient facility with no risks.

Basic vocabulary

For those who had nothing to do with loans before credit slang seems complex. However, you need to know the most important notions. Check them below!

  • Interest rates – a charge that is taken by lenders for the possibility to use their money. Every month interest rate is added to the monthly payment. Personal loan rates in Sri Lanka fluctuate from 1,8% – 3%.
  • APR – annual percentage rate. This is the percent of the loan amount you will have to pay for the right to use credit funds during the year. For example, the online loan company interest rate is 1% per day. That means that their APR is 365%.
  • Collateral – is an additional warranty for the lender. It isn’t required for online personal loans which is one of the most vital advantages. And this is one of the biggest advantages. Your car, house, apartment, or jewelry can serve as collateral, but it is usually asked in traditional banks.
  • Unsecured loan – a loan that doesn’t require collateral. Personal loans are mainly unsecured, which means that warranty is implemented through of higher interest rate.
  • Term – a period when you need to repay your loan. One of the key factors to decide on your interest rate. It’s a common practice for lenders to define the interest rate individually.
  • Credit score – your credit rating. Mainly it is your creditworthiness based on such data as your previous credits, personal information, and credit utilization. It also influences the final interest rate.

Main features

A personal loan is an installment loan. That means that you apply for a loan, get it, pay it back within its term and then your account in the company is closed. Well, there are different loyalty programs with bonuses and sales, but generally, it’s not like a credit card. You don’t own your credit more than the loan term even if you paid it back earlier.

As was said earlier it is the easiest way to get money. People like it for its convenience and fast survive. Micro-credit approval comes quickly and documents needed for application are always at hand. Applying for a loan on you’ll need the following documents:

  • 20-60 years old;
  • Permanent residence in Sri Lanka;
  • Employment certificate or constant income source confirmation (depending on the company);
  • Phone number and e-mail.
  • Reasons to lend

As microcredits are given not more than for 365 days, people normally don’t lend for long term goals. Plus sums of money are quite limited. That’s why various urgent situations push people to take credit online. The most widespread reasons are:

  • Urgent treatment or examination;
  • Short-term travel;
  • Critical need for renovation or purchase;
  • Payments that couldn’t be delayed.


Though such companies are absolutely legal and present in the financial market for more than 15 years by now, some people still believe them to be frauds. Such an attitude towards online loans is common in developed countries too. However, many people don’t understand all the risks related to their ability to pay the money back. So, be attentive to the interest rate. Remember that every missed payment means its rise. Plus don’t be surprised if it turns out that you repay twice more than you’ve lent. So, the best advice in this situation would be: lending anywhere is a risk, hence have a good reason to lend and a repayment plan, of course.

Loan repayment

Loan returning is an essential part of that deal. Wrong returning strategy or late payment may cost you not only extra money but it may lead to the legal proceedings. To prevent that you need to follow the repayment options that will be sent to you after confirmation or even reported before the application. There are several ways to return loan:

Some financial companies allow their clients to pay on the platform directly with the credit card that client used while registration. This is the most convenient way of repayment as there is no additional fee.
Ledges are allowed to pay through ATM too. Be attentive as this payment variant could lead to an extra charge.
Loan returning via bank is also possible, but again there is a significant charge.

Some companies allow their clients to return money earlier. For example, you’ve taken cash for 60 days, but your financial state changed and you can return the money on the 30th day. However, conditions differ from company to company, some online lending platforms even reduce interest rates if the client returned money earlier.

Pros and cons

So, to make the right decision you need to consider all the pros and cons.


  • The loan confirmation possibility is more than 95%. You just have to fill in the registration form without mistakes and give valid information.
  • Fast service – the most important. Approval within several hours or a maximum of two days couldn’t be even compared with waiting for weeks in traditional banks.
  • Minimum documents. Moreover, they are simple and don’t require any effort to get.
  • Optional conditions. Unlike banks, online loan organizations use special calculators to make loans suitable for your need ideally.


  • The interest rate is higher than in traditional banks. Therefore, the late payment charge is automatically higher too.
  • The age limit for lenders in Sri Lanka is strict. Some companies don’t consider 50+ clients.

Personal loans aren’t that scary and complicated as they seem. You’ve just needed to be focused as you don’t have much time to return the money. Nevertheless, if you’re ready to follow rules and pay in time online personal loan is a perfect way to solve your urgent problems.

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