A large number of Indians apply for personal loan everyday to get immediate cash for meeting various expenses. Today, almost all the banks in India offer personal loans. While the loans are readily available it is important that you carefully choose the loan offer. Some of the most important factors you need consider to ensure you get the best deal are discussed below:
Look for the loan with cheapest interest rate:
One of the most important factors you need to take into account while availing a personal loan is the interest rate. Ideally, the personal loans come with a very high interest rate that ranges from 14% to 25%. It is pivotal that you carefully compare the loan offers from different banks and financial institutions and understand the interest rates. This would help you get a clear idea about how much finance you would need for repayment and choose a bank that would require you to repay the least amount.
Penalty for prepayment of loan:
Before you sign-up for a personal loan, it is advisable that you ask the bank first-up about the penalty charges for pre-payment of your loan. Often times, people who avail loan tend to repay the loan before the end of the loan tenure. Usually, the bank charges about 2% to 4% pre-payment penalty fees on the balance principal payable. This additional charge would add-up to your total loan repayment amount. It is therefore advisable that you look for a personal loan scheme that doesn’t have pre-payment penalty.
Ensure you maintain a good credit rating:
It is important to maintain a good credit rating at all times. It plays an even more significant role if you are applying for a personal loan. Since a personal loan is an unsecured loan, the banks in India ascertain the risk factor in sanctioning your personal application based on your past credit history; the banks vary your credit rating from the Credit Bureau India Limited (CBIL). A good credit track record would help you to get your loan application sanctioned immediately. Besides, it may also help you get attractive discount on your interest rate.
This is another important aspect of personal loan. Not many people are aware of the fact that when you apply for a personal loan in a bank, the bank charges a certain fee for processing your loan application. The fees charged varies from bank to bank but it usually in the rage of 1% to 3% of the actual loan amount you have applied.
Loan Tenure and EMI:
EMI or Equated Monthly Installment is the amount you would need to repay to the bank for the loan you have availed. The EMI includes both the interest and the principal amount. While comparing the loan offers, it is important to calculate the EMI you would require to pay each month. The lower the EMI the easier it would be for you to repay the loan. Apart from EMI you must also consider the loan duration. The longer the duration, the longer you would have to pay to get rid of your debt condition.
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