The Best Way to Compare Personal Loans

Personal loans are one of the best financing options widely considered by individuals for meeting out their personal expenses. It could range from financing their higher studies, wedding expenses, travelling expenses, paying medical bills, debt consolidation, home renovation etc. The best part of obtaining personal loans is that they are offered by lenders without any collateral security. Although personal loans are widely available with various banks and non-banking financial companies at minimal terms and conditions and also offers flexible tenures of upto 5 years for repayment. Normally, the personal loans are only offered by assessing your repayment capacity and keeping a track of your past repayment history. However, the eligibility criteria differ from lender to lender. The eligibility is based on your repayment capacity and also on your continuity with your current occupation or business situation.

Though considering a personal loan is a very easy and quick way of managing your financial shortage but still going for a wrong personal loan can land you in serious troubles in the future. Hence, it is very significant to compare and examine the best personal loan offers and choose the one subject to your needs and affordability.

Let’s see some various ways which you can adopt while you compare personal loans of various lenders:

1. Get a clear picture of your actual EMI value

Before applying for personal loans with a particular lender, try to determine the approximate EMI value that you need to pay against your borrowed amount. You can take the help of a Personal Loan EMI Calculator and perform calculations using any lender’s website. This way, you will get to know the persisting difference between your monthly income and your actual EMI. If the difference is less between your monthly income and your EMI, it means you are consuming most of your salary against your EMI payments. In such a case, you should not take more loan amounts than your actual capacity of making repayments.

2: Contact your existing bank where you maintain an account

It is always appropriate to approach a bank where you are maintaining an account because the bank already knows your financial standing and creditworthiness. So, it becomes easier for them to offer you personal loans at a much faster pace. If you wish to approach other lenders, then you need to verify their credibility and assess the cost of the loan, tenure, terms and conditions of the loan on offer along with the interest rates, etc.

3 : Determine the Costs Involved and Penalties

Before applying for a credit, it is essential to think pretty much every one of the costs associated with the procedure.

• Processing Fee: At the time of loan processing, your lender will charge some cost relating to administration. This amount is comparatively small and usually differs between 0.5% and 2.50%. The personal loan processing fees vary from lender to lender. If you are applying for a personal loan, you need to choose from either paying the processing fee directly or allowing the deduction of the processing fee from the actual loan amount at the disbursement time.
• Verification charges: Your bank will first ensure themselves of your loan repayment capacity before disbursing you the loan. The bank will hire a third party agency to verify your credentials for verification purposes. These agents will examine your credit score and credit repayment history against applying for the loan. This additional cost incurred by the bank for verification purposes is the verification charge. This charge has to be levied on you as an additional cost of the bank.
• Goods and Services Tax: If you require any additional service at the time of your loan sanction or loan repayment, you need to bear the cost of such service by paying a small fee in the form of Goods and Services Tax or GST.
• Prepayment / Foreclosure charges: If you are keen to make advance payment either somewhere or fully before the due date before the closure of the loan, you may require to pay a strong amount for that as well. In order to compensate for the loss rendered by the bank, you may be charged with a fee known as a prepayment fee. This penalty is often charged at the rate of 2% to 4% and differs from bank to bank. Here’s a stepwise guide to Step-wise Guide to Personal Loan Prepayment.
• Late EMI Payment Penalties: If you don’t repay the EMI on a pre-defined date, you will again pay the penalties.
• Fees for duplicate statement: You may be charged with a duplicate statement of the payment schedule generated by your bank and an outstanding balance of the loan. This fee often differs between Rs.200 and Rs.500. This fee also differs from bank to bank.

4. Check for Minimal Documentation:

With the least documentation formalities, you can obtain the best personal loans from your lender. For example: If you are in a hurry to obtain some money, the least expected thing from you will be that you would be presenting a series of documents and filling so many forms.

Instead, go online to apply for personal loans. You are not required to be engaged in the documentation piles, instead, you can apply for a personal loan online within the comfort of your home.

No need to worry, if you are applying for personal loans from the bank where you are already maintaining a savings account. As they already have your KYC details, they would instant verify your credentials and won’t take much longer to sanction you the personal loan amount. Infact, the amount will directly reach your savings bank account.

5. The Loan Amount

The best personal loans are the ones that are already ready to be disbursed provided your lender knows the exact amount you need. If you require a loan of Rs. 20 lakhs, there’s no point to approach other lenders who are ready to offer you only Rs. 10 lakhs.

Personal loan interest rates

· SBI Personal Loan : SBI Personal loans are offered at a 10.50% rate of interest to its customers.

• ICICI Bank Personal Loan: These loans are provided at the interest rate that ranges between 11.25% — 18%.

· IDFC First Personal Loan : 11.50% rate of interest is offered on IDFC First Personal Loan.

• HDFC Personal Loan: Interest rates provided on HDFC Bank Personal loan ranges between 10.75% — 14.99%
• Kotak Mahindra Bank Personal Loan: 10.85% rate of interest is provided on Kotak Mahindra Bank Personal loan.