5 Things to Look Out for to Locate the Best Personal Loan Provider

Personal Loans are easy to get today. Almost all the banks and NBFCs (Non-Bank Financial Companies) are liberal in approving Personal Loans to borrowers having a good credit history. There is intense competition in the market. Under such circumstances, it is a challenging task to Find the Best Personal Loan Provider. Each Personal Loan provider has its benefits and drawbacks.

Let us now look at 5 things to look out for to find the best Personal Loan provider:

· Check out the eligibility criteria

In this era of competition, banks and NBFCs compete with each other to offer the most attractive Personal Loans. The eligibility criteria are different from bank to bank. Checking out the requirements by visiting the individual bank websites is not easy. The best way to compare is to access the site of Personal Loan providers like MyMoneyMantra. You can find a list of banks and NBFCs offering Personal Loan facilities on a single page. It makes it easy for you to compare the figures.

Check out the eligibility criteria. Some banks offer you 5 times your annual income whereas some offer 3. Concentrate on the one that is beneficial to you. Similarly, banks have different perceptions about the debt to income ratio. The ideal debt to income ratio is 50%. However, some banks prescribe a lower ratio to attract good customers. The lower debt to income ratio becomes crucial when you have a substantially higher income level.

· Look at the rates of interest

With the opening up of the economy, the banks are free to prescribe their rates of interest. The intense competition among the banks has resulted in the banks lowering their interest rates considerably to attract customers with easy Personal Loans. Therefore, you should check up the interest rates on the individual websites of the banks. You can get credible information from the official sites of the banks.

You should also look at the method of calculation of interest. Some banks follow the technique of daily reducing balance whereas some opt for the fixed rate of interest. Understand that the fixed rate of interest will appear to be lower, but in reality, they are not. Know how the mechanism works. This example will make things clear to you.

Bank A:

Loan Amount — Rs. 5,00,000,

The rate of Interest on daily reducing balance — 12.5%

Tenure of the loan — 60 months

EMI — Rs. 11,249

Bank B:

Loan Amount — Rs. 5,00,000

The rate of Interest on fixed EMI basis –8%

Tenure of the loan — 60 months

EMI — Rs. 11,666

Note that the rate of interest offered by Bank B looks attractive, but it is expensive as compared to Bank A.

· Look at the fees and other charges

Nothing comes free in today’s competitive world. Banks charge processing fees for processing your Personal Loans. The rates range from 2% to 5% of the loan amount. You can compare these rates at the website of MyMoneyMantra before opting for the Personal Loan provider of your choice. Specific banks come with festival offers during important Indian festivals like Diwali and so on when they waive these processing fees entirely. You can check out for such festive offers from these banks on their official website.

· Go through the terms and conditions

Personal Loans and other products of the banks come with hidden charges. Usually, it is difficult to spot them right away. However, you can ask questions and go through the terms and conditions before agreeing to the best Personal Loan offer. The terms and conditions cover everything from the payment tenure, the due date of payment of each EMI, the rate of interest (ROI), the method of calculating the ROI, pre-payment and foreclosure penalties, and so on. Weigh all these possibilities and compare different banks before signing on the dotted line.

· Your credit score is crucial

Your credit score has a significant bearing in the approval of your Personal Loan. An excellent credit score in the range of 700 and above should help you negotiate with the prospective lender for a reduction in the rate of interest. If you have an average credit score, the banks might sanction the personal loan, but at a higher interest rate. Therefore, check out your credit score before you apply for the Personal Loan. Go through the credit score carefully and look for the errors. If you find any, do not hesitate to dispute the same. Take up the matter with the credit bureau and the respective banks.

We have seen five things to look out for before you find the best personal loan provider. Follow these steps to get Personal Loans.

Also Read : Should You Get a New Credit Card?

To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 60+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.

Talk to our Loan Specialists toll-free at 1800 103 4004 to know more about our products and offers.