A personal loan comes in very handy when one decides to get some financial support in times of need. As no security or collateral is required by you, they are comparatively very easy to obtain. One of the major features of a personal loan is that there is no restriction on you relating to how and where you can spend the loaned money. Make use of a personal loan emi calculator and it can turn out to be very helpful.
However, before choosing to apply for a personal loan, it is crucial to do thorough research and comparisons and select the one that suits your requirements.
Know your EMIs
Before you choose a particular personal loan and the amount, you need to be sure that you will be able to repay it back on time. Therefore, it’s a must that you make an average estimation of the EMIs you would be paying. You can easily avail of the online EMI calculator facility provided by most of the lender banks on their official website or apps. This would ultimately not only help you borrow only as much as your repayment capability allows, but you would also be able to plan your regular finances and expenses accordingly.
Compare rates of interest:
The first thing that you should pay attention to while choosing a perfect personal loan is the rates of interest. You need to find a lender that offers a competitive interest rate so that an additional burden is not added to your debts. The goal is for you to fulfil your financial requirements strategically without having to hurt your savings. You should also be aware that the interest rates on personal loans are usually higher than other loans types.
Flat Interest Rate or Reducing Balance Rate:
Some lenders offer you personal loans at a flat rate of interest while others offer them at reducing balance method. In the case of a flat rate charged, interest is calculated based on the principal amount of the loan for the full tenure and all of your EMIs will be equal. Similarly, in the reducing balance method, interest payout reduces over the loan period as the principal amount of the loan is repaid, so the EMI also gets reduced. Calculate which option causes you to pay the lowest possible interest before making the decision.
Compare fees and charges:
Apart from the interest rates, it is also necessary for you to compare various charges and fees that come with a personal loan. These charges are processing fees, prepayment fees, part-pre payment fees, late payment fees, cheque bounce charges, etc. There are many banks that forego some of these charges and fees, so make sure to compare them to strike a good deal.
Read the offer documents carefully:
It is imperative for you to read the offer documents with great care and to understand all terms and conditions when it comes to finalizing your personal loan. In case of any doubts, talk to the lender immediately and clarify the matters. You can ask for details like:
- Will the loan amount be credited to your existing bank account?
- What will happen if you miss the due date for EMI payment?
- Will the EMI amount be automatically debited from your bank account?
- Will you be able to foreclose the loan and will there be any fees for it?
Documentation can prove to be quite an inconvenience when it comes to fast approvals and disbursement of loans. However, there are several options you can go for that require minimal documentation. With those loans, you can focus on the current requirements rather than spend time filling and submitting piles of paperwork. There are many banks that offer digitalization where you can avail a personal with a single click on the bank’s official website or app with very little documentation.
Flexibility of Tenure
Personal loans usually come in short to mid-range of tenures, so you need to make a conscious decision about your need and quantum of the loan and ability to repay the loan while choosing a perfect option. It’s recommended to find an option that offers an adjustable repayment tenure to suit your repayment schedule better.
Taking a personal loan to fulfil your urgent financial goals and requirements can be a smart choice. However, you need to make sure that you understand the terms and conditions and the burden it’s likely to cause on your finances till it’s repaid. After all, it is not wise to dig a debt hole for your future self to satisfy your present needs.