Blog #HDFC Personal loan interest rate

There is a personal loan origination fee that is not known to many people, so let us know about this expense in a little detail. Personal loan origination fees which is likewise known as processing, administrative or underwriting fees are credited by banks and lenders when you avail out a personal loan. They cover everything from processing an application form to verifying the applicant’s various eligibility criteria to covering other costs for the bank’s or lender’s loan operations. Sometimes it’s a fixed charge and other times it’s a certain percentage of your total loan amount which can be between 1% to 6%, and sometimes it can go as high as 8%.

Now let us discuss further about how Origination Fees can be determined? 

1) There are a few factors to determine the applicant origination fee. Your credit score is counted as one of them. If you don’t have a great credit score, lenders or banks may charge a higher origination fee to reduce their risk percentage if the applicant doesn't repay the loan amount. Considering, if you have a credit score of say 800—which is considered very good, the bank or lender might only charge an origination fee of 1% of your total loan amount; whereas someone with a little less credit score of 650 might be charged 5% for the same personal loan amount.

2) Your personal loan amount impacts your origination fee as well. With an increase in your loan size, the origination fee that you pay becomes larger, no matter how much percentage is charged. Your income and other financial debts, like home loan and mortgage payments, could also impact your origination fee. Because these fees depend on a combination of a lot of factors, origination fees vary from different banks and lenders, although some of the banks and lenders charge a flat rate of interest.

3) Next, let us discuss the Personal Loan Origination Fee Costs and some points relating to that. Origination fees usually lie between 1% to 8% of the total amount of loan and can cover a number of other costs, such as application fees, credit check fees and loan processing fees. However, the total origination fee on your personal loan depends on a number of factors such as your credit score and the loan amount.

4) Origination fees also can vary from different banks and lenders; there is no set fee on how much each one of these banks and lenders charges. Because each creditor has a different set of terms and conditions, in the same way each borrower has different needs, the amount you pay may be different from what someone else pays. Likewise, your bank or lender may want you to pay the fee in one of several ways. Usually, these costs are subtracted from your total loan amount or added on to the loan amount left. Another important point is that not every lender charges origination fees. If you don’t have a very good credit score and are not able to qualify for a personal loan at a bank or lender that does not charge origination fees, you may need to opt for a bank or lender who does. It depends on your needs for funds and your credit history. You can get an Instant Personal loan by following all the terms and conditions that banks and lenders ask for.

5) These are some of the important points that you need to keep in check when you avail a personal loan from a bank or lender that charges origination fees from you. You can always check your HDFC personal loan interest rate by checking their website to get a fair idea about the evaluation and sanctioning of your application for personal loan. This makes your loan process very simple and easier as you get to know about the steps before the time only.

Must Read:- PERSONAL LOAN AND THINGS TO DO TO AVAIL PERSONAL LOAN  

When there is the urgency of funds or any purpose, a personal loan can assist every competent person in using it handily. A personal loan is now available online on websites of different Banks and NBFCs, and there are even instant personal loan apps that help in the quick dismissal of personal loans. These websites provide potential customers with all necessary information regarding personal loans and even the comparative rates of different personal loans. The fundamental criteria to be eligible for a personal loan are the applicant's age between 23 to 58 years, net salary or income of at least Rs 30000, minimum of two years of experience in a job or any profession, and residence proof where the applicant is residing for at least a year or more. According to the borrower’s convenience, both the personal loan and loan against credit card have their advantages and limitations; according to the borrower’s convenience, one can be chosen.

On the other hand, credit card loans are handy and can be used physically in Store or online. If a person increases his credit card purchases and cannot pay off the dues on time, it can cost him an extremely high-interest rate on the remaining unpaid amount. It can further get accumulated and push the borrower into a debt trap. The credit card companies do not compel the borrower to pay off the balance all at once. Paying the minimum amount due or 'MAD' mentioned on the credit card statement is enough. Moreover, the credit card can be used until the remaining balance on it gets exhausted.

Both Personal Loans and Credit Card have their benefits and drawbacks. Eligibility criteria for most personal loans are not that rigid in comparison to credit cards. The purpose of debt consolidation with the low rate of interest personal loans serves the best. Personal loans can be borrowed online or offline, and the amount of a personal loan can get disbursed within half an hour once document verification is done. There are several drawbacks of personal loans too. Interest rates of personal loans range from 13% to 36% and have additional processing fees, which is on the higher side when compared to credit cards. HDFC Bank personal loan interest rate and some other banks providing personal loans are comparatively lower. Thereby it helps the customers to get a pocket-friendly personal loan. The credit score of the borrower must be high to get a personal loan approved. Even the documentation process in the personal loan plays a pivotal role, but that does not happen in the case of a credit card.

Credit card applications can be done anytime, and no additional documentation is required for it.  If a person has a good credit rating, it is enough to make him eligible for a credit card loan. Credit cards also furnish options to transfer balance at times at zero per cent interest. The repayment period also ranges anywhere between 12 to 21 months which is the best for debt consolidation. There is no requirement of physical presence in a bank for application and approval of a credit card related loan. Still, there are some drawbacks of the credit card which must be taken into account. The interest rates of credit cards can be higher depending on the credit cards' APR. Even some credit cards also attract annual fees, late fees and over the time limit fees. Moreover, the essential criteria for a credit card loan with low interest rates are a CIBIL credit score of 700 or more. 

A personal loan is a better option for salaried individuals and self-employed people with a continuous cash flow. Whereas, credit card loan is considered to be a revolving debt. So the ultimate winner depends upon the requirements of the borrower and his financial stability. It is always recommended for people to get loans with low rates of interest. So, according to the borrower’s convenience, he can choose a cheap personal loan or a cheap credit card loan.

Must Read:- REPAYMENT OF PERSONAL LOAN 

A personal loan is always a convenient alternative for being pocket-friendly, with cheap instalments and providing a speedy disbursal of loan amount with nominal official paperwork to be done against it.  Moreover, one can pay it back over time. Moreover, it works for the borrower to build credit and make it manageable to reduce the unsettled debts rate by extending competitive interest rates and adjustable borrowing limits. Wedding loans, home renovation loans, travel loans, medical loans, debt consolidation loans, and small personal loans are examples of personal loans.

A person who misses a payment on his loan or other debts for more than a billing cycle is considered a loan defaulter. Missing loan payments on time is not a healthy financial habit, and non-repayment can cause severe repercussions for credit score. Managing all debts can be a very tedious task, and it is easy to fall into the debt trap as there are so many loan products in the market. Making a loan default is an unpleasant experience that brings down the credit score of the borrower. An emergency fund should always be ready to deal with any financial emergency as a defaulter does not get a loan quickly. To avoid defaulting, it is best to choose a personal loan with a low interest rate provided by different Financial Institutions. But there are some alternatives available to the borrower for repaying a personal loan after he defaults. For example, HDFC personal loan interest rate, SBI personal loan interest rate.

Punjab National Bank personal loan interest rate, etc. There can be genuine reasons for a person to do a loan default, but it always has a long-lasting effect on the financial portfolio of the borrower. Further, it damages their credit score indicating poor debt management by him. Among various options available to secure funds in case of emergency needs, a personal loan is always an option as it is not that rigid regarding the eligibility requirements of the applicant.

Lenders or lending institutions consider the repayment capacity by checking the CIBIL credit score before authorizing him with a personal loan. A poor CIBIL credit score not only imposes rejections but also restricts the power of purchasing, ultimately affecting the standard of living. Though it is not very easy to get a personal loan with a low credit score or a defaulter, it can be availed in some cases.

The defaulters of a personal loan have some alternative to repay the loan amount, and the most common option is to take a secured loan like a gold loan and repay the personal loan. Another option can be to convince the lending Institution of the creditor to restructure the loan with an extended period of repayment and a low rate of interest. Even some personal borrowing can also be done to repay the loan from friends and relatives. Finally, apply for another loan with a guarantor or co-applicant with a good CIBIL credit score and pay off the unsettled dues with the generated loan amount.

A good market study and getting a cheap personal loan with low interest and nominal processing charges are always recommended. It is always recommended to take a personal loan after accessing all the factors of it. It should always be estimated first whether the amount borrowed for the personal loan can be repaid within the stipulated time or not. The borrower must have a stable and steady income and not many other debts previously piled up. The loan applicant must do proper financial planning of his monthly payments. The EMI that has to be paid for a personal loan can be evaluated before taking up the loan with the help of a personal loan EMI calculator.

Must Read:- Benefits Of Personal Loan