With the emergence of numerous personal loan apps in the financial marketplace, acquiring substantial funds for various purposes has transformed from a complex process to a simple task that can be achieved by an individual through a few clicks without stepping outside. Whether it is a medical emergency, a wedding function, or pursuing higher education, a personal loan is considered an ideal method to obtain money quickly and conveniently in current times. Additionally, the digitization of lending solutions helps in providing customized personal loans with minimum paperwork and flexible repayment terms.
While new-age financial institutions offer instant personal loans at affordable interest rates, they also provide extra benefits such as online verification and quick disbursement for a long-term customer relationship. Along with fast processing and quick approval, the lenders might also be able to waive off certain additional charges which the financial institutions levy on the customers at the time of loan sanctioning. Hence, in the ever-evolving modern technological landscape, one should be aware of all the loan-related features offered by the lenders to obtain the best loan deal available in the financial sphere.
Read on to know more about the 5 ways to choose the right personal loan lender.
- Pick the right loan product
While there are various loan schemes available in the market which sound quite rewarding, one must be aware of their requirements and choose the personal loan product accordingly. For instance, if you require a lump sum of money on an urgent basis but the lender is offering you a higher amount which might take a longer disbursement time, then it fails the very purpose of obtaining a personal loan. Similarly, in case the lender is offering a loan at a low-interest rate than usual but demands collateral in return, it can cost you a valuable asset if you fail to submit the monthly installments on time. Hence, one should always choose the personal loan offer best suited to their needs without falling for a lucrative trap offered by lenders.
- Compare the rate of interest
Another key aspect to focus upon while picking the lender is checking and comparing the rate of interest offered by the lender as it determines the overall cost of the loan. A loan is repaid by the borrower through equated monthly installments (EMIs) over a fixed/flexible tenure and the interest rate levied by the lender is directly proportional to the EMI amount. While a small hike in percentage may seem insignificant to the borrower, it can increase the overall loan amount by a considerable margin. Hence, one should always calculate the EMI amount through a personal loan calculator beforehand and look for the lowest rate of interest offered by different lenders to make a sound decision.
- Evaluate your eligibility
While the loan parameters are decided on the basis of the borrower’s eligibility and requirement, different financial institutions vary in terms of required eligibility conditions. For instance, some lenders require a higher monthly income than others while others may demand a certain CIBIL score for providing the requested loan amount. Hence, one should perform comprehensive research regarding the eligibility criteria for a personal loan to avoid any confusion later.
- Assess all the loan-related charges
Along with the accrued interest rate, there are various additional charges levied by the financial institutions while providing the required funds such as the processing fee, documentation cost, late-payment charges, etc. In addition to it, one should also check the pre-payment fee charged by the lender if wish to close the loan before the fixed repayment tenure as many financial institutions impose a heavy penalty in such cases. Thus, one should inquire about all the visible and hidden charges before finalizing the lender.
- Read the loan contract carefully
Finally, one should go through the loan agreement drafted by the financial institution carefully and be aware of all the mentioned terms and conditions to avoid any discrepancies in the future. The agreement is a legally binding contract that must be read and understood with utmost sensibility before proceeding ahead.