Oct 16, 2020 ●10 min read
How To Choose The Perfect Personal Loan Option?
A quick financial need is a distinct possibility for anyone who is unable to meet major expenses. Most public and private sector banks and non-banking financial companies (NBFC) offer personal loans at affordable rates. Such loan products are ideal for financial aid as little documentation is needed since the loan applicant is exempt from submitting collateral security.
However, it is quite daunting a task to research and find an optimal loan lender. There are various tools such as eligibility evaluator to EMI calculators which will assist you to compare a bunch of personal loan choices within an hour. Here are some tips to induce the proper loan quote for you.
It is clear that doing smart marketing research will eventually decrease the chance of loan burden while repaying it. This is often crucial as personal loans go with a higher rate of interest. So, if you decide on a loan choice with the uneconomical rate of interest it might increase the interest payout. We understand it could also be exhausting to do it when you have less time at hand, as you have to cope with financial crises, however it doesn't really take a lot of time. There are several loan aggregating sites that provide personal loan choices from all loan lenders within the market.
The possibilities of your application getting approved depends on your eligibility for a personal loan. Hence, before even doing the product search, it's wise to do a profile assessment. Personal loan may be an unsecured loan product which means it counts your economic standing and financial credibleness as the guaranteeing factor. Thus, it might be better if you just check your credit score, aka CIBIL score, before you decide on a loan option. Typically, an individual employed in a reputed firm or well-sustaining business owner gets better loan quotes as their loan repaying capability is higher.
You'll wish to apply for a personal loan from the first loan lender that you come across, however it's vital to decide on your lender right. Most borrowers make a choice from public or private banks and then zero in on whoever offers better loan quotes. However surprisingly, NBFCs also provide better credibility advantages and services compared to major players within the markets. Although most loan lenders provide reduced interest rates on personal loans, some lenders additionally offer an extension on borrowing limit and concession on processing fees.
Those choosing personal loans opt for longer tenure to make repayments more manageable. However, whereas repayments could also be smooth, you'll find yourself paying a higher interest amount even if you can afford to repay the entire loan amount in a shorter tenure. Therefore, it's wise to choose a tenure period as per your financial scenario such that the imperative fund borrowing would be a burden that you can manage easily.
Excluding the interest rates, it's also vital to match the fee and charges related to a personal loan. The fee and charges include process fee, late payment fee, prepayment fee, part-pre payment fee, cheque bounce charges, and so on. Some banks provide limited offers on their fee and charges and you would possibly get a really good deal once you begin comparing.
Some lenders might give you the choice between flat interest rate and reducing balance rate. In case of a flat interest rate, interest is calculated based on the loan principal for the whole tenure and all your EMIs are going to be precisely the same. Alternatively, in case of the reducing balance rate method, interest pay (hence EMI) reduces over the loan tenure because the loan principal is repaid. ensure you calculate which option promises a lower interest pay out before making your choice.
It's vital to read the offer documents very rigorously and to utterly understand all the terms and conditions concerning your personal loan. If you have got any doubts, clear them instantly with your lender. Do ask for details like:
1. What happens if you fail to pay EMI on time?
2. Can existing bank accounts be used to receive funds?
3. Is foreclosing the loan a possibility?
4. Are partial prepayments possible?
5. Will the monthly EMI be automatically subtracted from your account?
Taking up a personal loan to meet your dreams may be a smart move however only when understanding the terms and conditions and your affordability. Yes, you need cash in the present but that doesn’t mean that your future deserves an unneeded burden of significant EMIs thus it is always better to decide on wisely.