Reasons to compare different personal loans in the market?

If you are planning on taking a personal unsecured loan, then I must say that it needs to be a well thought decision. There is lot of responsibility with this decision. Now, in case you have made up your mind to take a personal loan, it is time to find the right bank or financial institution. There can’t be a guide that will let you know exactly that which bank/lender can be ideal for the personal loan as every individual have their unique requirement, financial status and choice.There are a lot of options when it comes to banks, financial institutions and individual finances in the market but, you should do your homework well as this will be a long term association.

This decision could affect the lives of many individuals and therefore will need special care and attention.But, how would you choose between these banks, NBFC’s and private money lender? In this blog, we will share our tips on how to compare and select the right lender for your personal loan.Loan comparison is not a simple process however, you should take care of few important things.Remember we can only guide you but, the final decision in this matter has to be yours.

Let’s discuss the main parameters which you should compare before you apply for a personal unsecured loan:

Processing Cost:

The borrowers has to pay some various other charges to the bank in case of personal loans because lenders give these loans without any security in lieu of the the amount disbursed.

These additional charges are known as processing fees.The financial institution decides the rate of the loan as processing fee.

Let’s say, when a approved loan is 2 lakh and the processing fees of the lender are 3%, then processing charges for you would be Rs 6,000.The percentage of processing fee ranges up to 2.5Percent of the loan amount.Processing fees should be in your checklist while finalizing a bank or a financial institution for a personal loan.

Amount Range:

Personal Loan amount provided to you is different in almost every bank and financial institution.It is a good idea to ask a financial institution about their max and min loan disbursement amount for a loan.Eg, if you need a very low amount personal loan, then you should look for the loan companies whose range start from a fairly low amount.There are lenders who offer as high as Twenty-five lakhs in a personal loan.

Rates of Interest

The next thing that you should compare is the rate of interest offered by several financial institutions.Who wants to pay more when there are options available for lower rate of interest?

Its easy to check rate of interest of a bank or a financial institution. You just need to search online or logon on their official site.It is important to know that whatsoever is written on the loan providers website might not be 100% true for you because your actual rate of interest will be dependent on your a number of factors.For Example, If you have a strong bank statement and no credit card defaults then you may get a best interest from the financial institution.The typical loan rates ranges from 10% to 35% according to different financial institutions.

You may like to read know all about balance transfer personal loan.

Eligibility Terms and conditions

Becoming eligible for a loan is the basic requirement to get a loan.There is absolutely no point even looking at getting a loan if you are not eligible for it.Yes, you should check the eligibility requirements before opting and applying for any personal loan.It will be wastage of ones research and time if you’ll apply without checking eligibility as it can become the cause of personal loan being rejected.

So, our advice is to do the checks about this first.

Required Documents

We all hate documentation, but for a smooth personal loan approval, it is important to submit all the required documents in one go.Getting papers required for a loan should not be very difficult as it only require ones which we have got like Aadhar card, Income tax statements and bank statements.In certain cases, some of our documents do not have accurate personal information.So, peaking into required documents section of financial institutions would give you an idea of what is needed.

Payment Option

People usually avoid taking personal loans because of the tension of high installments. Is personal loan payment amount is nightmare for you?.To resolve this problem, lenders have flexible installment options.You should do a comparison of the equated monthly installments and repayment choices before you apply for the personal unsecured loan.Never assume all banks will have all types of repayment options so, it’s a good idea to talk about this while you are submitting an application for a personal loan.

Equated Monthly Installments Tenure

The number of equated monthly installments to be paid are depends on the time period of repayment in any loan.When your salary doesn’t allow to repay the loan EMI’s in a timely manner then it is recommended to either reduce the loan amount or increase the tenure of the personal loan.Almost all loan providers will assist you to choose the loan term according to your bank statement and monthly salary. Sometimes there are offers provided by loan companies where they provide special rate and option to choose tenure You can check out more such offers on the internet.

Penalty Fees

Every individual wants to pay personal loan equated monthly installment on time but, sometimes they are not able to pay it due to any reason.Loan providers also aware of this fact. So, there are certain penalty charges that are already fixed by lenders in case of missed settlement.You should research and compare the loan offers on this basis irrespective of how much optimistic you are about your punctuality or pay back ability.We have seen in the past that people like Sandip Jhunjhunwala and Jatin Mehta have created headlines for bank default. This has shown that lender is always at a huge risk while giving a personal loan and hence they apply some penalty charges on default installments.As we mentioned earlier, the charges can vary from bank to bank as well as dependent on your interest and time you have defaulted.All these factors are usually made very clear by financial institutions before providing the loan.Interestingly, most people are uninformed about these things and sometimes don’t even care(I would certainly call that as negligence).

The only thing which comes to their mind at that time to receive the loan amount in their bank account.Our recommendation is to do a complete homework with at-least these shared parameters before you apply for a loan.