If you are planning on taking a personal loan, then I must say that it should really be a well-thought decision.
There is a large amount of responsibility for this decision. If you have decided to take a loan then the next step is to find the right financial institution who can lend this loan to you.
There cannot be a guide who will tell you exactly that which bank/lender can be ideal for the loan as every individual have his or her own requirement, financial status, and choice.
The sector is flooded with lenders and NBFC’s but, you have to research about them before you apply in any of them.
This decision may affect the lives of many individuals and therefore will need special care and attention.
The question is on which factors someone can evaluate various loan providers?
Yes, we will tackle this for you today.
It is advisable to take care of specific factors while evaluating loans. Please remember we can only assist you but, the final selection in this matter really needs to be yours.
Let’s discuss the major parameters which you should analyze before applying for a personal loan:
Loan Amount
Loan amount provided to you is different in every bank and financial institution. It is a good idea to ask a financial institution about their maximum and min personal loan disbursement amount for a loan.
For example, if you need a low amount of loan, then you should look for the financial institutions whose range start from a fairly low amount.
You’ll find a few options when you are looking for large amounts, for instance, Twenty-six lakhs.
You can opt for a HDFC bank loan in this scenario.
Processing Amount:
In addition to the rate of interest, there are additional charges which loan provider charges to process the loan application form.
These additional charges are commonly called processing fees. The rate of the processing charge is the same for each and every client for a particular bank but, % may vary from bank to bank &financial institutions.
For example, if the approved loan amount is 2 lakh and the processing fees of the bank are 3%, then processing fees for you would be Rs 6,000.
Processing fees vary from bank to bank but, ideally, it ranges from 2 to 2.5 % of your amount of the loan. You should compare processing fee amounts while deciding the loan company.
Eligibility Terms and conditions:
Do you know if you are eligible for a loan or not?
There is absolutely no benefit of selecting a specific loan if you cannot complete its eligibility terms.
Yes, you should check the eligibility requirements before opting and applying for any personal unsecured loan.
If you don’t do that in the beginning, then you may end up losing a lot of time and your energy.
So, our suggestion is to carry out the checks on this first.
Repayment Options
I generally stay away from taking loans because it gives me a worry to repay a specific amount every month. One of the nightmares of the loan customers is repayment of the Equated monthly installments. You will find multiple repayment options with the banks to address this issue.
If loan EMI’s is more than what you can pay back every month then, make sure you consider reducing your loan amount. Talk to your lender for a type of payment options they have got. This will make your life easy
Penalty Charges
If you have taken a loan then you have the intention to pay back on time. However, at times situation in life are not always favorable and for that reason, your default in payments.
Financial institutions also very well know this situation. That is why there are certain penalty charges which are fixed by financial institutions because of late settlement.
You should research and compare the loan offers on this basis irrespective of how much confident you are about your punctuality or payback ability.
The charges are decided primarily because financial institutions also suffer from a loss due to your delayed payment.
In that case, it’s a way of ensuring safety from any loss by the lenders like I said, the fees will differ based on your default time period, rates and also the lender who has landed you the money.
All these parameters are really easy to find on the lender’s website or the form which you fill for the loan. It is just that we’re not fully aware of these things and their effect on us.
At the time of taking the loan, our main concern is to get the amount as soon as possible. Simple research of 2-3 hours is what you require to find everything about these factors.
This is possible if you take a look at various websites of banks and financial institutions.
Rates
The next thing you should compare is the loan rates offered by multiple loan providers. We all need the lowest interest rate so that our equal monthly installments are as low as possible
You can check the interest rates provided by loan companies online but, it is advisable to go and ask for the rate of interest yourself.
It is important to know that whatsoever is written on the lender’s website might not be 100% true for you since your actual interest rate will be dependent on your several factors.
For example, if you have a good relationship as an account holder in a bank, that can work in your favor for fixing of loan rates. The average rate of interest range from 10% to 40% based on your credit score.
EMI Duration
More the personal loan length, lower the EMI amount. If you think that your loan EMI is beyond what you can pay then you should think about increasing your personal loan duration.
Not to worry, your bank will definitely offer you an option to select your loan duration but, it may have some dependency on the credit history.
Most of the time there are offers offered by NBFC’s where they offer special interest rate and option to choose the duration. You can browse more such offers on the internet.