A personal loan is a reliable medium of finance. The easy-to-get loan requires no security or collateral and can be used as per the discretion of the borrower. However, a critical factor here is the choice of the lender. There are several banks and financial institutions that offer instant personal loan at competitive interest rates. However, selecting a viable lender is crucial.
Here are some tips to help you choose the right loan lender:
Compare interest rates
While finalizing a loan lender, the first thing to compare is the personal loan interest rates. The interest paid on the loan amount heavily impacts your finances and budget. The rate of interest is also affected by your credit score.
In all, the rate should be affordable, but it should not be the only basis of choice. Often, a high-interest rate may offer considerable value in some other form. Also, it is best to know if the interest charged is a flat rate or a floating one. In the former, the EMIs remain the same for the entire period. In the latter case, though, the EMIs fluctuate based on the changes in the general interest rates.
Read the documents carefully
Usually, loan advertisements and promotions are very attractive. But the legal terms, obligations and policies of the loan are mentioned only in the fine print or the documents. Hence, while choosing a lender, you must go through the terms and conditions carefully. Some things you must check include:
- What happens if you miss an EMI?
- What are the EMI deducting facilities?
- Is foreclosure of a loan allowed?
- What are the various penalties and charges?
- Is debt consolidation permitted?
Know the services and features
A handy tip to consider while selecting the lender is to evaluate the services and features offered. Check how quick the personal loan documentation process is and what are the stages of application. Also, be aware of the approval time, query-resolving process, attention given to each applicant, customization options, etc. Assess any additional features the lender offers to make the loan more attractive.
Be aware of other charges
A personal loan is a very attractive option to have. Hence, often people ignore the hidden costs and fees, which might prove to become a huge burden later. While evaluating lenders, check the additional charges levied such as the processing fee, pre-payment charges, late-payment fee, etc.
Moreover, in certain cases, lenders also have stringent rules and penalties for specific conditions such as defaulting on EMIs, the pre-closure of a loan, cheque-bounce situations, missing information, etc. All rules and terms must be evaluated beforehand.
Overall, the choice of the lender should be made with patience and prudence. It is advisable to apply for personal loan with lenders that charge a reasonable interest, offer fair value, provide exemplary customer service, have preferable terms, and the lowest costs and fees. With Tata Capital personal loans, you are sure to find all these benefits and more.