Points to consider while comparing different personal loans

The decision to take a personal loan is a big part of anyone's life. As with this decision comes lots of responsibility. The first thing which comes in your mind after choosing to go for a loan will be the selection of a reputable and suitable lender. There are no rational professionals who will guide you and would suggest the right bank for your loan as per your needs.

The market is full of lenders with plenty of interesting offers but, one should be very careful while going with an option as this is not merely another shopping.

When you choose a bank, you must understand that it is not just you but, also your family members might have an impact based on your selection. Main problem is how to select the right lender when you have these several choices and which is meets your needs?

Yes, we will help you solve this question today. You should take care of somethings while comparing personal loans. We're just here to help you but the decision is actually all yours.

Let's discuss the top factors which you should compare before applying for a personal unsecured loan:

Amount Range:

Different bank officials have decided a range which they can provide to the buyer as the personal loan. It is a good idea to ask a bank about their max and minimum loan disbursement amount for a loan. E . g ., if you need a very low amount loan, then you should look for the finance institutions whose range start from a fairly low amount.

Although the loan amount depends on various aspects but on a high level the amount is as high as 30 lakhs.

If you need a high personal unsecured loan amount then Indiabulls personal loan should be in your list.

Interest Rates

When it is about paying off money, how can we forget about rate of interest? Interest rates are different for each lender and hence it is important to look for an institution which offers best rate of interest. It's very evident that every person needs low-interest rates so that they don't have to pay off hefty amount as interest.

Its easy to check loan rates of a lender or a financial institution. You just need to search online or logon to the official website. The reason behind this is banks provide various rates as per the credit score of individuals. For example, if you have a good rapport as an account holder in a bank, this can work in your favor for fixing of interest rates.

The average rate of interest range from 11% to 35% based on your credit history

Processing Amount:

The consumers has to pay some extra charges to the bank in case of unsecured loans because lenders give these loans without any security in lieu of the loan amount.

These additional charges are also known as processing fees.It is the bank which decides the % of the processing charge to be charged from the individual.
As an example, if your loan amount is 1 lakh and processing fee is 2%, then you have to pay 2% of Rs 100,000 (i.e. 2,000) as the processing charges.Processing fees vary from bank to bank but, ideally it ranges from 2 to 2.5 Percent of your loan.You should check processing fee amounts while deciding the lender.

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

Necessary Documents

Nobody likes to do a lot of documentation but, you need to submit some basic papers for receiving the personal loan. Documents required by banks are mostly similar but might have differences based on the lending institution and your credit score.

Many times, some of our documents do not have correct personal details.So, peaking into documents section of banks gives you an idea of what is needed.

Loan Eligibility

First thing which a lender or an NBFC checks is your personal loan eligibility. If you're not eligible then no bank or financial institution will provide you a loan. You may get a loan from a private loan provider with a higher rate of interest that might put a hole in your wallet.

Yes, you should check the eligibility requirements before choosing and applying for any loan. If you do not do this in the beginning, then you may end up killing considerable amount of time and energy.

So, research in this section properly.

Loan Tenure

EMI calculators are available on all financial institutions website to calculate your loan EMI amount based on simple inputs like amount, interest and personal loan tenure. In a longer payment duration, your EMI will likely be much less which becomes a burden on you.

Not to worry, your financial institution will definately provide you with an option to decide on your loan tenure but, it may have some dependency on the credit history.

Most banks and NBFC's provide flexible duration to pay back. The tenure can range from 1 year to Six years depending on several other factors(ideally CIBIL Score) You can find information on community forums and question and answers websites such as Answers.com.

Payment Option

Concern with high installments and EMI's will be there if a person takes a unsecured loan. Is personal loan payment amount is pain in your ass? You can find multiple repayment options with the loan companies to take care of this particular problem. You should compare the equated monthly installments and repayment choices before you apply for the loan.This will relieve lot of stress.

Penalty Charges

If you have taken a personal loan then you have the intention to payback on time. But, at times situation in life are not always favorable and therefore you default in repayments.

Financial institutions also understand this fact. That is why there are certain penalty charges which are fixed by lenders because of missed settlement. You have to research and do a comparison of the personal loan offers on this basis no matter how much optimistic you are about your punctuality or repayment ability.

We have witnessed in the past that people like Sandip Jhunjhunwala and Nirav Modi have created headlines for bank default. This has shown that financial institution is always at a huge risk while giving a loan and hence they apply some penalty charges on default repayments.

As we mentioned earlier, penalty can vary from bank to bank and even dependent on your interest rate and time you have defaulted. All these parameters are always made transparent by financial institutions before providing the personal loan.It's just that we are not fully aware of these things and their impact on us.

The only concern which comes to their mind during that time to receive the money in their account. But as an aware consumer, we must research the right way beforehand.