Personal loans are a convenient way to get emergency funds. It allows you to acquire the sanctioned amount with no collateral, at a lower interest rate, and for a longer tenure. It may seem simple, but you must research well and then choose the best personal loan in India.
There are many factors that you need to take into account before you make a decision. You must consider your monthly income, the duration of the loan, the interest rate, and whether or not you want to pay off your loan in installments or with one lump sum.
There are Six Ways that You can Use to Pick the Best Personal Loan:
#1 Interest Rate
The interest rate is the first and most critical factor to consider while choosing the best personal loan in India. It depends on the market scenario, the applicant’s age, credit score, income, and loan amount. The credit score is the most important of all of these factors. The better the credit score, the higher chance you have of acquiring a personal loan with a reduced interest rate.
Different lenders offer varied interest rates on personal loans. Look for one with a low-interest rate. A personal loan eligibility calculator can assist you in determining your eligibility and the interest rate you’ll pay on the loan. Browse around for several lenders and then pick the best one.
The documentation related to the personal loan is the next point to examine. The best personal loan in India will need the least amount of paperwork. If you need money right away, you can’t wait weeks for the loan paperwork. Instead, you’d want quick loan approval so that you may get the money you need instantly.
While numerous lenders can handle the loan swiftly, we recommend going with the one you already have a relationship with. As a result, you will not be required to present any documents because they already have the relevant information, such as your personal and financial information. As a result, the approval procedure would be far more lenient and speedy.
#3 Loan Amount
You can determine the loan amount you want to borrow based on your needs. However, depending on your profile, not all lenders will sanction the same amount. For example, taking a personal loan is pointless if you require INR 15 lakhs, but the lender can only give INR 5 lakhs. Thus choosing a lender who understands your requirements and can supply you with the appropriate loan amount is crucial.
Your financial status and credit score will determine your loan amount. There are high chances of getting the desired amount if your credit score is good. Furthermore, the lender will consider your ability to repay the loan, determined by your monthly income. Calculate the amount you qualify for with a personal loan eligibility calculator.
#4 Loan Tenure
Another point to consider while choosing the best personal loan in India is the loan tenure. It affects the EMI you’ll pay each month and the interest you’ll pay on the principal amount. The loan tenure might range from 12 to 60 months or more, depending on the loan amount. A longer tenure means a lower EMI but for a higher interest rate. You can use a personal loan EMI calculator to find the perfect tenure for your loan amount.
#5 Repayment Flexibility
Most personal loans come with a prepayment facility, where you can repay your loan amount before the designated tenure. It is essential to find lenders that charge no or low fees for part prepayment in such cases.
#6 Processing Charges
Finally, before choosing a lender, consider the loan processing costs. All lenders levy interest rates and repayment amounts, but certain lenders have concealed extra charges that you may be required to pay.
Late payment penalties, extra interest on overdue amounts, cheque bounce fines, and service taxes are examples of additional costs that will cause you to spend more than your estimate. Look for a lender with 0-2% processing costs. It will lighten your overall load.
These are the six best ways to choose a suitable personal loan.