Personal loans are the most suitable option whenever you are looking for an option for your financial solution. Today personal loans are provided by banks, credit unions (NBFCs) and online lenders. There are many options available to you but you do not have to consider all these options. Some lenders offer more attractive personal loan products than others when it comes to personal loans. More importantly, lenders will also offer different rates to applicants based on the financial status of the potential borrower.
Whenever you go to find the best personal lender for you, the first thing to do is to evaluate the types of loans that each lender offers. You as a customer will need to consider the APR, fees and overall experience to make an informed decision.
Why is it important to buy the best personal loan?
There come some times in life when you have to depend on someone or the other for financial needs. Personal loan is the most suitable option for you at such a time. You have to approach any bank or NBFC for a best personal loan. It is important that you shop around with multiple lenders to ensure the best deal on a personal loan.
If you settle for the same loan with the first lender, you may suffer the loss of not comparing to others and you may not be paying high interest. Today many lenders give you loan after checking your eligibility online within minutes. You should first analyze all these types of loans. Doing so can help you find the least expensive loan.
Factors to know for the best personal loan
Whenever you talk about best personal loan, it is very important to know some factors as well. Let us go through those factors –
Annual Percentage Rate (APR)
The interest rate simply means the cost of borrowing whatever amount you borrow. Whenever you apply for a personal loan, the interest rate or cost of borrowing is usually determined by your credit score and loan tenure. Lenders advertise the lowest interest rate to lure their customers. Although the lowest rates are usually reserved for customers with excellent credit scores. A good credit score can also fetch you competitive interest.
If you have a low credit score, then personal loans can be available at a slightly higher interest rate. But you should look for lenders who consider other factors such as your job history or educational background to get a personal loan with a competitive interest rate.
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Whenever you go to talk about taking a personal loan, the first thing you have to keep in mind along with the interest rate is the charges or fees charged by the lender. Many lenders offer certain charges depending on how much you borrow, processing charges, verification charges, Goods and Services Tax, late payment of EMI Penalty on late payment of EMIs, Penalty for prepayment or foreclosure of loan and Fees for duplicate statement are included.
When you apply for the loan, the lender charges a non-refundable fee which can range from 0 – 6% of your loan amount. Many lenders offer personal loans without application or origination fees and you will not be charged any penalty if you pay off your loan early. Don’t disqualify a certain lender through fees though. In some cases the cost of the loan may still be lower, even if you have to pay some fees.
It is also important to check the customer experience of the lenders you are considering for your personal loan. You can select them by a few things like -what are their hours of operation? Are they available by phone, email or chat? Can you go to a physical location to get help? These are some of the questions through which you can evaluate lenders very easily.
Whenever you go to take a loan, first of all you should identify your specific purpose. Do check if you have a specific purpose for the loan, or will you use the money to get back on track financially? Because lenders usually do not restrict the way in which the money can be used.
However, personal loans are either secured or unsecured. They also come with a fixed rate that remains constant or a variable interest rate that changes over time, and many are marketed for a specific purpose.
Also Read – 3 Ways to Avoid Getting Overcharged for a Personal Loan
How to choose the best lender for you
Choosing the best lender by you depends on the reputation of the lender and the loan terms offered by them. Although your credit score and overall financial history will determine whether you qualify for the loan or not. When it comes to loans, get quotes from all the lenders and evaluate the interest rate and fees. It is also important that the lender has a track record of providing exceptional customer support to its past and current customers.
Before applying for the loan, make sure your decision first. Sometimes the decision should not be taken on the basis of loan charges, the interest rate may be low. A personal loan from a lender that is not reputable or provides excessive customer service can prove to be even more costly. With some research and time, you may be able to find the best personal lenders for your situation.
Frequently Asked Questions (FAQ’s)
Q1. What is APR?
APR stands for Annual Percentage Rate (Annual Percentage Rate). This is known as the annual cost of the loan to a borrower. Which is taken from the borrowers or paid to the lender.
Q2. What are the charges of personal loan?
The main charges or fees of personal loan are as follows –
1. Processing charges
2. Verification charges
3. Goods and Services Tax
4. Penalty on late payment of EMIs
5. Penalty for prepayment or foreclosure of loan
Q3. Who are the Personal Loan Providers?
Personal loans are mainly provided by banks and NBFCs (Non-Banking Financial Company) in India. Which you can get through online and offline medium.
The Bottom Line
People often consider personal loans to be the most suitable option for any financial solution and it is true. Today personal loans are provided by banks, credit unions (NBFCs) and online lenders. There are many options available to you and you can choose the best loan for yourself by considering all these options. Whenever you go for a loan, you must do some research which includes APR and charges.