A plethora of Personal Loan schemes are available both online and offline from numerous lenders. Choosing the right one is not an easy task, especially for someone who is availing a loan for the first time. Here are some common parameters that will help you choose the right Personal Loan based on your requirements:
Interest Rates
The most important parameter to judge a Personal Loan offer is the interest rate, which is often the first thing most borrowers consider while availing loan. Many people think that a little difference doesn’t really matter—but it does in the long run, especially when the loan amount is big and the tenure is long, a miniscule rate differential can save you a lot of money.
Check the interest rates offered by different banks and NBFCs online and do a detailed comparison. Banks and NBFCs often come up with deals and promotional offers during festivals and other events during different times of the years to attract more customers and and this is a good time to avail a loan. If you get a loan at a lower interest rate, it’ll have a huge impact on the amount you repay and also the loan tenure.
EMI & Repayment Tenure
Repayment tenure and EMI are inversely proportional to each other—increasing one reduces the other.
When you take a loan, everything boils down to one thing—your EMI or equated monthly installment. Depending on the loan tenure, you can work out a comfortable EMI amount with your bank. The amount easily fits into your monthly budget without burdening you with undue financial stress.
Remember, even at the same interest rate, a long repayment tenure will mean a very high interest amount. With long tenure and high interest rate, you’ll have to pay much more than the original principal amount making borrowing unjustifiable. When you apply online, make sure to use a Personal Loan EMI Calculator to better understand your financial liability for the months to come.
Allied Charges
All banks and NBFCs charge a meagre processing fee and this is something that can’t be avoided. Prepayment and foreclosure penalties are some of the other charges they levy. Try and look for a lender that doesn’t charge any of these.
Eligibility Norms
The loan eligibility criteria varies from one institution to the other and shouldn’t be ignored. If you’re availing a Personal Loan in Mumbai or any other metro cities, you most likely need to have a higher income as compared to a person availing loan from cities like Aurangabad, Bhopal, or Kanpur.
Explore all such possibilities before applying for a Personal Loan.
Approval Time
Personal Loans are often the only way out for people in need of urgent money. There’s no point in getting the money, when you’re no longer in need of it. So, make sure that you consider the approval time offered by different lenders.
Comparing these few parameters will give you the insight necessary to get a suitable Personal Loan based on your needs and requirements.