Home Business Stuck in a financial emergency? Note these 5 checkpoints when availing of a personal loan.

Stuck in a financial emergency? Note these 5 checkpoints when availing of a personal loan.

by Hassan

A personal loan in India is one of the most important unsecured borrowing instruments available in the marketplace. Such loans are easy to avail of because you do not require to pledge any collateral or security. Dissimilar to car loans or home loans that are product linked, personal loans can be utilized for any reason. The requirement to avail of your personal loan can come up at any life stage. You might require a personal loan to avail of a home renovation or mitigate sudden medical expenditure. This can be your ideal financial pal during any hour of the financial crisis. In case you are in the market to take up your first personal loan in Delhi or personal loan in Hyderabad, there are some crucial factors that you must ensure. This blog touches upon crucial points to assist you in availing of an ideal deal. Have a look:  

Review to know if you are eligible

Eligibility standards for every lender differ and are distinct for self-employed or salaried individuals. Before you submit a loan application, you should check if you mitigate the eligibility criteria laid by lenders. Generally, individuals between the age groups of 21 and 65 years can take up personal loans. The minimum net monthly income needed to take up the loan differs between Rs 15,000 and Rs 30,000 every month. Applicants might also require having minimal work experience, like 1 year in the present job or 2 years in overall. Conditions differ from one lender to another. Apart from this, lenders also check your credit score before they approve your loan application. A higher credit score can assist you in availing of the personal loan at a lower rate of interest. Eligibility criteria are distinct for banks as well as NBFCs (non-banking financial companies). When it comes to the lending norms, lenders are a little more stringent than NBFCs. Thus, if you find it tough to fit into the lender’s eligibility criteria, you might explore taking the personal loan from NBFCs. 

The loan amount you can easily repay

While lending institutions are forthcoming in granting the personal loan to customers, you must just opt for the loan amount that you need and are comfortable paying back. Depending upon your credibility, your lender might also provide you with a pre-approved loan that might appear lucrative. Avoid opting for the loan only because of its pre-approved nature and need minimum documentation requirement. A loan is nothing but a financial commitment that you may repay. Thus, evaluate your reason before availing of the personal loan and make sure to avail only the required amount. While determining the loan proceeds, also ensure to factor in the EMI calculation that you can pay back without impacting your crucial financial goals. 

Compare different personal loan products that are available in the marketplace.

Before you take up the personal loan facility, ensure to compare different personal loan products that are available in the market based on the rate of interest, processing charges, penalty charges like pre-closure charges, prepayment charges etc. Consider availing of a personal loan that endows you the right to pay back the EMIs and pre-close the loan without the need to incur any penalty. Loan repayment tenure must match your needs. After a thorough comparison of the loan products, you must prefer the product that best matches your needs and comes with the lowest borrowing cost. 

Choose the loan offering the lowest rate of interest.

As compared to secured credit options, personal loans are generally provided at a higher rate of interest that ranges anywhere between 9 and 24 percent. The higher the rate of interest, the higher is the EMI. Thus, when you look for a personal loan, review the rate of interest provided by distinct lenders. The table given below mentions a list of public and private sector lenders providing the lowest rate of interest. Remember that if you choose a longer duration for repayment, while the EMI outgo will be lesser, the interest outgo will be higher. And if you choose shorter repayment tenure, EMI outgo would be higher, and the overall interest repayment would be lower. Consider all the aspects before you settle for the rate of interest. 

LendersRate of Interest (P.A)
Central Bank of India8.90 percent
Union Bank of India8.90 percent
Punjab National Bank8.90 percent
Indian Bank9.05 percent
Bank of Maharashtra9.45 percent
Punjab and Sind Bank9.50 percent
IDBI Bank9.50 percent
State Bank of India9.60 percent
UCO Bank10.05 percent
State Bank of India9.60 percent
Bank of Baroda10.00 percent
Kotak Bank10.25 percent
Bank of India10.35 percent
Federal Bank10.49 percent
Yes Bank10.40 percent
HDFC Bank10.50 percent
ICICI Bank10.50 percent
IDFC Bank10.49 percent
Indian Overseas Bank10.80 percent
South Indian Bank10.55 percent
IndusInd Bank11.00 percent
Karnataka Bank12.45 percent
Karur Vysya Bank12.00 percent
Axis Bank12.00 percent
Dhanlaxmi Bank11.90 percent
Canara Bank11.25 percent

Select the correct lender based upon your preference and suitability

Eligibility criteria differ considerably when you compare between NBFCs and banks. There are times it is simpler to avail personal loan from NBFC owing to its flexible norms and eligibility criteria. However, you might find banks providing personal loans in Delhi or personal loan in Hyderabad or any other city at cheaper interest rates and processing charges. Thus, you must carefully choose the lender based on your reputation, flexibility, rate of interest and various other charges. 

Crucial Things to remember

In case you are not able to easily repay your personal loan within the due date, it may impact your credit score and even affect the prospects of your future borrowing. Thus, ensure that you have the potential to repay the loan on time. Thus, ensure you can pay the loan within the due date. It is recommended to keep your credit option requirement lower as compared to your repayment capacity to make sure financial comfort while meeting the EMI. In case you use it in a wise manner, it is one of the fastest and simplest ways to arrange funds when you are witnessing a monetary crunch. 

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