When applying for a loan from a lender, you can be overwhelmed with the easy availability and no collateral risk. But amidst this, you may forget to consider some crucial factors. Before finalizing the loan, you must scout for rates from several lenders and analyze critical features to ensure that you get the right loan product.
Here are the six essential parameters you must look for when you compare personal loan:
When you compare various loans, the most fundamental aspect is the interest rate. Most lenders offer rates within a similar bracket. However, it is important to look for different interest quotes for loans before arriving at a decision. Moreover, many lenders have promotional schemes and offers running often, which tend to bring down the interest of the loan. Opting for low interest personal loans is certainly a good decision.
When applying for an instant personal loan, you might skip the hidden details of the additional charges applied by some lenders, such as processing fees. This can considerably affect your personal credit amount. Hence, always check for all additional charges and ask for a reduction wherever possible. Try to choose a loan provider with minimum allied fees.
Additional Reads – Top Factors Affecting Personal Loan Interest Rates in India
Eligibility and time
You should choose a lender that offers loans with minimum documentation hassles and easy eligibility criteria. Not all loan providers have the same rules. Hence, you must evaluate all your options before finalizing the deal. Moreover, the time a lender takes to approve the loan is important. Quick personal loans are ideal.
Tenure and EMIs
When you are looking for personal finance, you must be very vigilant. Make a detailed comparison of the maximum repayment tenure offered by the lender and the corresponding EMIs. The longer the tenure, the smaller will be the EMIs. But this will also significantly increase the interest levied. Evaluate different offers and check the tenure and EMI option that suits your income and need. You can use a personal loan EMI calculator available online to decide better.
Prepayment and foreclosure
While making the loan assessment, check all the prepayment and foreclosure terms. In some cases, loan providers charge a fee ranging from 2-5% for closing the loan before the due tenure. While low interest personal loans might seem attractive, the deal could include a hidden future cost.
Additional Read – All You Need to Know About Personal Loan Prepayment Option
In some cases, lenders often ask you to purchase an insurance policy with a loan, since the latter is unsecured credit. The insurance carries a premium, which further increases the cost. Thus, when you compare personal loan eligibility of different banks and institutions, keep a check on such policies. Always choose a policy with maximum coverage and a reasonable premium.
With so many products in the market, you must be extremely careful when you apply for a personal loan. Be patient and assess all factors before submitting any documents. To enjoy the best features in the market, you can opt for easy-to-repay personal loan from Tata Capital.