05 Jan 2021 | 5 min read
A personal loan is a handy financial option that you can opt for in times of emergencies. This unsecured loan can be availed in a quite easy and seamless way due to its most attractive feature which is that it doesn’t ask you to pledge any of your assets. Today, there is an ample number of moneylenders available in India that offer instant personal loan and enable you to fulfil your emergency needs.
Another key advantage of availing this loan is that its usage is limitless, which means you can use it for any of your positive personal needs. The loan is a popular choice in emergency times such as medical emergencies, repaying credit card bills, paying off former debt obligations additionally, it is also famous as a funding option to fund social occasions, vacation plans or to buy consumer durables.
In short, personal loans come handy to fulfil all personal financial needs. Therefore, it is the most popular type of loan in India and several other books in the world too.
Because of its growing popularity in the market, dozens of lenders are offering a personal loan to customers. However, interest rate, loan amount, tenure, etc. vary from lender to lender. Hence, it is rather confusing to decide the right loan for you.
Below, we have drawn 9 most important factors that you must consider if you are musing or wishing to take a personal loan in 2021.
Prior to initiating the loan application process, you must contrast various loan offers to come up with an ideal personal loan that suits your needs.
Financial institutions including traditional banks, NBFCs and instant loan personal loan apps charge different rates of interest. Remember that with every personal loan application, your credit score gets a small hit, therefore, you must give your larger time on studying various loan offers of different lenders along with the low-interest rate. You should also consider other factors such as repayment tenure and additional charges.
Prior to fixing a certain loan offer, you must check the additional fees and charges besides the interest rate. Some lenders offer low-interest rate but they might charge the high amount as additional charges such as processing fees, foreclosure charges, etc. and if you choose them, then you may end up spending more than usual and your expectations.
So, don’t be totally dependent on the interest rate factor to opt for a certain loan offer, consider other fees and charges too such as processing fees, bounce charges, penal interest, prepayment charges, etc.
Based on your circumstance, you may or may not figure out the actual fund you require. Pick a lender who offers a sufficient loan amount to cover your expenditures.
You can also choose a lender who extends more flexibility to you. There are some lenders like Bajaj Finserv, that offer a Flexi personal loan which allows you to avail the approved loan amount in parts as per your needs.
In other words, you can use the money in accordance with your requirements and you will need to pay the interest amount only on the amount that you utilize. You can choose the interest-only EMI option and can then repay the principal amount at the tenor-end.
If you want to repay the loan prior to the tenor end, you will need to give a small fee for the same called foreclosure charges. Although, there are a few money lenders who are now extending offers with enhanced repayment flexibility features by giving free part and full repayment of personal loans.
If you think you can pay off the loan ahead of the loan tenure, apply with a lender that doesn’t charge a prepayment fee at all or charges minimal fees.
Borrowers prioritize to choose a longer-term to avail affordable instalments alongside tax benefits on a personal loan, but they forget that the longer tenor, the more interest they will have to pay. Thus, it’s recommended to opt for a shorter tenure while making sure that the EMI remains under your budget.
Don’t overburden yourself. Prior to availing a certain personal loan, establish an ideal idea in terms of your monthly instalment and the repayment tenure.
Assess whether you are weighing down yourself or is the loan ideal for you! To perform so, you can simply take the help of a personal loan EMI calculator. There is an abundance of personal loan calculator available online that will give you a near estimate about your monthly outgo within a matter of seconds.
To find out the best personal loan offer, you must consider the processing timing. Theoretically, today, almost every money lender states that it extends personal loans instantly. Although, you may see which lender offers the fastest approval and disbursement.
On the contrary, you also need to ensure the low-interest rate, flexible repayment, etc. alongside instant processing.
Today, availing financial assistance in emergency circumstances in the form of personal loans is quite easy and seamless as there is an abundance of alternatives available in the market. While on the other hand, it can also be understood that with the constant increase in the number of loan providers, choosing the best particular loan offer is quite thwarting. Therefore, you must consider some important factors prior to concluding one.
Aforementioned 7 factors are among the most important ones that will definitely support you in choosing the best personal loan not only in 2021 but also in the further years during your emergencies.
You can also compare different loan offers of different banks using Afinoz instant personal loan app, alongside, you can take the help of personal loan EMI calculator which will help you to get an estimate of your monthly outgo. Download the Afinoz app now from the Google Play Store and apply accordingly.