Find a Personal Loan That Suits Your Needs

1. Find a Personal Loan That Suits Your Needs Getting a personal loan is easy if you know what to look for. When you apply, personal loan criteria like interest charged, fees and penalties, and disbursal time need to be checked in order to find the best terms on your loan. This guide shows you how to choose a lender and decide on the amount to borrow, the tenure for the loan, and the EMIs. Why take a Personal Loan? There are many advantages to opting for online personal loan, especially when you’re in need of a quick buck. No Collateral Required In India, personal loans are unsecured. You don't need to provide security, like your house or shares, to successfully avail of a personal loan. This makes it easier to apply for one when you don’t have any collateral to offer. Quick Access to Emergency Funds A personal loan is your best choice to acquire the required funds when you’re in a financial fix. And now, with the advent of online loan application, the process is quick, and the sanctioned amount will be sent to your account within a few days. No Need to Provide Reason For Loan There are many needs that a personal loan can fulfil, but the bank won’t ask you questions regarding why you need the loan. They only check your eligibility for the loan and your repayment capability before sanctioning the amount. How to Find a Personal Loan Lender Once you’ve made the decision to apply for a personal loan, you need to decide which bank or NBFC to get the loan from. You can go online and look at financial market websites to help you choose. Get Information on Possible Lenders Find out the banks and NBFCs who provide personal loans, and do a thorough research on the minimum and maximum loan amounts they provide, the tenures and interest options, the charges they levy, and the time they take to credit the amount to your account. Compare Personal Loan Providers Compare the terms and interest rates offered by different banks and NBFCs for personal loans. The eligibility criteria, the minimum and maximum loan amount, the interest rates and fees vary across institutions.

2. Choose a financial institution that offers terms to suit your financial requirements and then do a features comparison of the loan offers from these companies. Third party financial marketplace websites make this process easy for you, providing tools to compare personal loan offers. Fees and Penalties Involved Lenders charge a processing fee before you apply for a personal loan, and a few lenders even charge certain additional fees after you get the loan. These include foreclosure charges, prepayment charges, default penalties, and late payment fees. Banks and NBFCs are business organizations and they intend to earn an amount in the form of interest on your loan. If you take a loan for a fixed tenure and close the loan before it ends, the banks would lose out on their expected interest amount. To compensate for this, banks charge prepayment penalties in the range of 2 to 5% of the outstanding amount and may also charge a fee for foreclosure of loans. Choose a loan offer with the least number of penalties and charges, and the lowest rate of interest. You need to look at these factors carefully because if you can afford to pay in lump sums and close the loan before time, it will save you a lot in terms of interest payments. How to apply for a Personal Loan After choosing the lender who has the best terms in interest rates and charges, you need to apply for the loan. You can either go to the bank in person or you can apply online. Use a Loan Eligibility Calculator Before formally applying for the loan, use the EMI personal loan calculator at the lender's website to get an approximate idea of the loan amount you are eligible for. Find out details what is the interest rate for personal loan and the EMI you can expect to pay during the tenure.

3. Apply for the Loan Applying for online personal loan has many advantages, like saving time on travel and limiting the number of instances you need to visit the lender. You can fill in the required details online and submit the loan application, after which the financial institution representative will visit you to collect the necessary documents for the loan. Make Sure You Have Good Credit If you have a good track record of paying off previous loans, keeping up with your other EMIs, and clearing your credit card dues, you’ll have a high credit score. This increases your chances of getting approved for a personal loan. If you have not taken a loan previously and have no credit cards, it might be hard for the lender to assess your creditworthiness. Documents Needed You need to have the basic Know Your Customer (KYC) documents like ID proof, age proof, and address proof. You also need to provide documents like your income proof, salary slips, bank statements, IT returns, proof of employment/business existence, and educational qualification certificates. You can find a check personal loan eligibility and complete detailed list of the documents required at your lender’s website or at third party websites. Go through these and keep all the papers and records ready to hand over to the bank representative. Do not Borrow in Excess Be clear on how much money you need right now, and don't borrow more than that, even if you are eligible for it. Personal loans entail higher interest because they are unsecured. That’s why it’s best to use them in smaller amounts. It’ll save you a lot of money by reducing the amount of interest you’ll have to pay.

4. Choose Diminishing Interest Rate You can choose between a flat rate and a diminishing interest rate. Flat rate interests are calculated on the entire loan that you’ve taken, to decide how much you pay as EMI during your loan tenure. The diminishing rate is recalculated for each EMI on the outstanding loan balance. Thus, even if the diminishing interest rate is a bit higher, it can actually help you save money over the long term, because the interest is calculated on the reducing principal amount each month. If you make regular EMI payments, the diminishing balance interest is definitely the better choice. Pay off the Loan in Short-Term Choose the largest amount of EMI you can afford and shorten the loan tenure. With a longer loan tenure, you could suffer from an increase in the interest rate, and you’ll probably end up paying twice the amount you borrowed. It’s also a good idea to choose lenders who levy zero prepayment and foreclosure charges. At the very least, try to choose the lender whose penalties and charges tend to be the lowest. The Loan Disbursal Once you have finalized the terms and submitted all the documents, the lender begins the verification and credit-checking process. If you pass these stages, your loan amount will be sanctioned. The online application and approval process is completed pretty quickly and you should receive the money within a couple of days. If you need the funds for an emergency, choose the lender with the shortest approval process and disbursal time. If you are in need of immediate funds, and you are looking for a loan that does not require a collateral, a personal loan is your best choice. They are easy to obtain if you have a good financial standing or a great credit record. Choose the lender and the loan terms carefully, and avoid opting for large amounts and long tenures. Take a loan for the exact amount that you need and pay off your debt within a shorter tenure if possible. A personal loan can help you meet your immediate needs if you plan your finances out well enough. So, with these tips in mind, let the personal loan hunt begin!