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How to Choose The Right Personal Loan

Aman Khanna
 


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When you go shopping, you buy exactly what you need. You may even do a trial or test the product before buying it. Why not do the same when shopping for personal loans online? Browse through multiple products to compare the terms. Do not choose a personal loan without understanding the product. Let’s look at the factors that could help you get the right personal loan:

Loan amount

You may need a personal loan to pay for a wedding, a vacation or a medical emergency. Decide how much money you need to borrow first. Factor in the amount of money you already have available. Next, check whether the loan fits your needs. Avoid borrowing more than what you need. The higher the loan, the more interest you would end up paying.

Interest rates

The lender offers an interest rate based on your CIBIL score. TransUnion CIBIL maintains the score and it depends on your credit history. The score is updated periodically. Check your CIBIL score before submitting your loan application. This can help you rectify discrepancies in your score. You can directly contact CIBIL to report any errors.

Is your CIBIL score good? Then you could get good interest rates on the personal loan. You can negotiate the interest rate with lenders if you have a high CIBIL score and a clean credit history. Sometimes, lenders offer interest rate discounts to existing customers. So, compare the different rates on offer. This will help you find the best deal.

Fees and charges

Lenders levy charges for the different services they provide. Consider all the charges in place. That includes processing fees and equated monthly instalment (EMI) bounce charges. If you delay an EMI payment, you may have to pay penal interest. Lenders have foreclosure and prepayment charges as well.

Loan tenor

Your EMI depends on the loan amount, the interest rate and the loan tenor. Adjust these three parameters so that the EMI is within your comfort zone. If your cash flow position is not good, choose a longer tenor. This will reduce your loan EMI and make loan repayment more affordable for you.

Time for approval and disbursal

The approval and disbursal times could be crucial if you are in a rush. Some lenders take days to process a loan. Others make use of technology to speed up the loan processing. A non-banking financial company (NBFC) like Bajaj Finserv can approve and disburse your loan within a day. So, check the lender’s turnaround times before choosing a loan.

Repayment options

Some loans come with several repayment options. A case in point is a product like Bajaj Finserv’s Flexi Loan. Here, you get a credit line where you first pay interest on the amount you use. Then you repay the principal in parts. You can borrow from the credit line multiple times. So, you can use the loan as per your cash flow position. There are many repayment options, and these may vary from one lender to another. Choose one that meets your need.

To sum up

Many other factors could influence your decision to opt for a personal loan . For example, there is brand loyalty and the promise of discounts. Just ensure you do not end up paying more than you need to. The above factors can help ensure that your loan does not become a financial burden.

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