If you’re looking for ways to improve your quality of life, a personal loan can help you get started on the right foot. Pay for a better-furnished house, vacation or education with this loan instead of dipping into your savings. Why not enjoy the best today rather than wait until you can save up? To ensure that an instant personal loan is viable, you must ensure that you pick the right lender.
Take a look at 5 pointers that you can use to evaluate lenders better.
Compare personal loan rates
Before starting the application process, you must narrow down the type of personal loan that fits your needs. Lenders include traditional banks and NBFCs, all of whom charge different interest rates. Keep in mind that with every personal loan application, your CIBIL score takes a minor hit. So, your loan application should be the final step. First, compare loans, contact lenders and seek all the necessary information.
Check the loan amount
Depending on your needs, you may or may not know how much money you need in total. Choose a lender who offers a substantial loan amount that is sure to cover your expenses. You can also pick a lender who offers you more flexibility. Some lenders, such as Bajaj Finserv, offer a Flexi personal loan where you can withdraw the loan amount in parts as and when you need funds. You only have to pay interest on the amount you use, and you can choose to pay EMI comprising only the interest. You can then repay the principal at the end of the tenor. This type of loan is ideal for a home renovation. For example, if you have to make regular payments of varying sums to different service providers and can’t be sure of how much money you need in one go.
Additional read: Personal loan up to Rs. 25 lakh only with Bajaj Finserv
Read the fine print
Each loan provider will have a legal document dictating the terms of your personal loan. So, you must ensure that you read through the fine print and understand your obligation. Ensure that you are aware of and agree to all the conditions spelt out regarding the personal loan. If you have any doubts, contact the lender for clarity. This document is legally binding, so make sure you are comfortable with the terms it contains.
Take note of processing charges
Lenders charge a processing fee of 2%–3%, exclusive of GST. This amount is deducted from the loan amount that you are to receive. Find out what the lender is charging you to process your loan and then ascertain its affordability before applying for it. Check all the other associated charges too.
Check for prepayment charges and penalties
It is prudent to use any surplus income to make part prepayments towards your loan. This will help you pay lower interest. However, some lenders have stringent rules regarding prepayment accompanied by hefty charges. So, find out what these are and the minimum prepayment amount allowed. This will help you realise if you will be able to clear the loan quickly or not.
Use this checklist to screen all prospective personal loan providers to ensure that you get the best deal on your personal loan.
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