Which Lender Is Best For Your Choices In Personal Loans?
With personal loans becoming popular, new lenders are coming out every day. This has uplifted the bar of competition for the lenders and they are coming up with unbelievable offers every day. This has made it very essential to know what you should look into a lender and their offer before availing a loan from them.
Following are the points to evaluate to know which lender is best for you :
1) Interest Rates: As discussed earlier, the increased competition has made lenders offer at competitive rates. A lot of lenders offer at low-interest rates to attract more customers. Therefore it's very important to compare different interest rates offered by banks and non-banking financial institutions. Comparing would allow you to get the most affordable deal for you. Use a personal loan interest calculator to do accurate and timely calculations.
2) Loan amount: Different lenders have different ceilings for loan amounts according to your income level. Whenever you find the perfect interest rate for you, check if that lender provides your required amount on your income level or not. Call on their helpline by going to their website and inquire about everything.
3) Income eligibility: The minimum income level required is different by different banks and NBFCs. Some have 15,000 as the minimum income requirement while others have Rs. 25,000 as the minimum requirement of Income. It varies greatly from one lender to another. Therefore before applying, check for this so you don't apply at a place where your application is ultimately going to be rejected due to a policy.
4) Read terms and conditions: This must be done even before applying, not after everything gets approved and you are about to sign. When you like a loan scheme, ask the representative to show you the terms and conditions and read them thoroughly. There might be some technical jargon / terms. If you don't understand them then ask for help from the representative who is assisting you or some professional.
5) Look for processing charges: Many lenders charge processing fees and it could be as high as 5 percent or even more. Even though it is a one time charge but when you include it in the expenses you would be paying, it makes up a considerable amount. Hence, check your lenders terms related to processing charges.
6) Look for prepayment changes: Most of the lenders charge you for prepayment. If you don't know already what prepayment means, it means to pay a portion of your outstanding amount before the time to reduce principal, which then reduces the interest. Lenders can charge you anywhere between 2 - 6 per cent for prepayment. Look for the one that doesn't charge a very high prepayment fee so in case you want to prepay later, you don't have to pay heavy charges in it. This is also called partial prepayment.
7) Look for foreclosure charges: Foreclosure means closing beforehand, that is, paying back all the loan amount before the due date. This saves a lot of interest payments for the borrower and reduces lenders profit since the interest payments are reduced. Hence, it's important to see how much your lender charges on foreclosure. Foreclosure is also called full prepayment. This is why people mostly get confused between the two. It only makes sense to prepay or foreclose if you are doing it well in advance, that is, in the earlier stages of your loan.
The first year is usually the lock-in period therefore you won't usually be able to prepay in the first period. The first year usually takes away 60 % of your obligation therefore it's very important to prepay very early as soon as the lock-in period ends.
Check for different lender's interest rates, prepayment fees, processing fees etc. before you go for any loan. Check Hdfc personal loan interest here.
Try maintaining a good relationship with your lender. Timely pay back the loan if you have taken it earlier. Deposit cash from time to time in your bank. Don't enter into a tiff with any employee.
Read More:- Choosing The Right Lender In Personal Loan
