How to choose the best personal loan as per your needs

A personal loan is one of the best ways to raise funds in case of emergencies. Funds can be received quickly with less documentation. Most people avail a personal loan for a medical emergency, for travelling abroad, a wedding, or for their children’s education.
Borrowers who opt for a personal loan can choose the repayment as per their financial situation. Repayment can be done over a few years or months. However, there are various factors that individuals must consider when opting for a personal loan. A few of them are given below: 

Loan procedure: As many people require a personal loan immediately, it is vital that the process for the loan amount to reflect in their bank account is not long. It is important to check the number of documents that are required and whether the documents can be submitted online, or whether you will need to visit the respective bank or Non-Banking Financial Company (NBFC) to submit the required documents. In case individuals already have an account with the bank, it takes lesser time for the personal loan to be approved. You can check with your bank or via net banking whether you have a pre-approved personal loan that can be availed. 

Consider the Equated Monthly Instalments (EMIs): A personal loan can be repaid over a specific duration which you can choose at the time of application.  It is vital to choose the duration according to your financial position. Choosing a monthly payment that can be afforded by you is important. A shorter duration means a high EMI will have to be paid every month, but the interest rate, in this case, will be low.  In case a longer tenure is chosen, the EMI amount will be low, but the interest rate will be high. There are various third-party sites where you can compare and choose a personal loan as per your financial needs.  

Check the interest rate: The interest rate is one of the most important factors when opting for a personal loan. The overall cost of the loan is inclusive of the processing fee and interest rate. Both these factors must be considered when availing a personal loan. In case you want a lower interest rate, the loan must be paid back over a short duration. The interest rate and processing fee will be mentioned to you by the bank or NBFC when you avail a personal loan.  

Compare: Since there are many banks and NBFCs that offer personal loans, it is important to compare them before choosing the right one. Even though the loan amount might be the same, the interest rates and processing fees could vary depending on the bank or NBFC. There are various third-party websites available where personal loans from different banks and NBFCs can be compared before choosing the right one as per your requirements. Checking if the bank or NBFC has good customer service is important as they could help resolve your queries quicker.


Check the terms and conditions: It is important to go through all the terms and conditions of the loan being offered. Check if there are any hidden charges and payment terms, such as how prepayment works. It is also important to check what the penalty charges are if the EMI is not paid back on time. It is vital that you understand how a personal loan works before opting for one. 


Repay on time: Repaying your EMIs on time not only protects your credit score but also helps you in availing a personal loan in the future in case there is another emergency. It is important to maintain a healthy relationship with the lender as it can help you in case of any requirements in the future.  

Conclusion 

Keeping the above-mentioned points in mind could help you choose the best possible personal loan as per your requirements. It is also important that you maintain a good credit score as it can determine the loan amount and interest rate. Checking for reviews of the bank or NBFC online can also help in choosing the right personal loan. 

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