A personal loan is one of the most convenient financial resources to meet unforeseen circumstances or to make bulk purchases owing to its easy disbursement procedure, and no end-use restriction. However, it must be noted that the competition among lenders remains high for this loan segment with some coming forward to provide added benefits to attract maximum borrowers. In this circumstance, choosing the best personal loan associated with your needs may become perplexing.
Listed below are thus certain factors that borrowers must take into account while availing a personal loan to determine the most suitable option for them.
5 Tips to select the best personal loan
The main factors that borrowers should consider before availing the personal loan are types of personal loan, eligibility criteria, interest rate, and repayment flexibility, along with additional fees and charges, which are explained below in detail.
- Know the types of personal loan
There are different types of personal loans customized for various purposes, such as debt consolidation, education loans, wedding loans, and other short-term loans. Depending upon the need and purpose, a borrower can select one among the different types of personal loans for effective financing and maximize the benefits so provided.
- Check your lender’s eligibility criteria
Borrowers must always look out for financial institutions that lay down easy-to-meet eligibility criteria for quick and hassle-free disbursal of personal loans. Reliable financial institutions specify strict sets of rules with regards to CIBIL score, age, employment, and some other essential parameters. Therefore, individuals should primarily check for these requirements to find the best option for them and avoid complications in loan processing.
- Compare interest rates offered by different lenders
Interest rate is an important parameter that must be judged by an individual to determine the best personal loan that suits his/her affordability. Interest rates on personal loans are set by lenders after determining the creditworthiness of a borrowing individual. Generally, borrowers with a good CIBIL score and a credit rating above 750 stand a better chance of securing lower interest rates. However, if the score is only satisfactory, then the borrower can make use of the personal loan calculator to adequately calculate the monthly installments that fit his/her repayment capacity. A borrower can also avail Flexi Loan facility from select lenders to enjoy flexibility in withdrawal. The facility also helps reduce the EMIs payable with interest charged only on the amount withdrawn.
- Consider the availability of repayment flexibility
Flexible tenure of loan repayment can provide a convenient borrowing experience. Therefore, borrowers must always look for institutions that allow repayment flexibility so that they can spread out their EMIs as per their convenience and avoid mistakes while repaying their debt. It will also reduce the risk of defaults and late payments, and in turn, help to maintain the overall credit rating.
- Take into consideration additional fees and charges
Apart from interest rates, lenders also levy additional fees and charges for a personal loan, which are relative and differ from one financial institution to others. To avail of the best personal loan for respective needs, borrowers must learn about all other charges like bounce charges, penal interest, and secure fees, so that they can adequately evaluate the best loan option. Furthermore, borrowers should always go for lenders like Bajaj Finserv who ensure transparency in levying all the charges.
Further, an existing customer of the lender can also check out his/her pre-approved offer, which helps simplify loan processing and reduces the time involved. These offers are available on a range of financial products like personal loans and business loans and can be checked by simply providing minimum contact details.
Any borrower following all the above tips can identify the institutions that can provide them with the best personal loans adequate to meet their financing needs. This will also ensure that the processing is made hassle-free with minimal documentation, and the loan is disbursed within the shortest time possible.