A Personal Loan is one that is availed when one is in need of cash or in case of emergencies. You can also take a personal loan to purchase big ticket items like laptops, mobiles or even finance family vacations and weddings. Gone are the days when being in debt is looked down upon. An average urban middle-class individual is dependent on loans in ways more than one, and this also makes their lifestyles easier to sustain.
A Personal Loan these days can protect you from an unforeseen financial crunch. Most banks process Personal Loan applications quickly and the amount of approved loan is disbursed to you in the matter of a few days..
Factors that determine Personal Loan interest rates are:
- Income: How much you earn
- Credit and Payment history: Banks refer to credit scores. If you have a poor credit rating, your application has a possibility of being rejected or the bank will give you a much higher rate of interest considering the uncertainty and risk involved.
- Company Status: Banks divide the companies into various categories, such as:
- CAT A – means Top 1000 companies
- CAT B – MNCs (Multi-National Companies)
- CAT C – Small companies
- Non-Listed- Smaller companies with less than 100 employees
- The Bank: If you have a Salary account or Savings account and Apply for a Personal Loan with the same bank, they might give offer some added benefits, like lower interest rates or processing fee.
Low credit scores are due to the following reasons:
- Multiple loans
- High utilization of credit limits
- Having no credit history
- Too many rejected loans or Credit Card requests
- Clearing Credit Card dues with the bank by paying a lower amount than the due amount
- Untimely payment of loan EMIs (Equated Monthly Instalments) or Credit Card dues
Factors to keep in mind when applying for a Personal Loan:
- The rate of Interest – Comparing all products on offer before taking a decision is a wise path to adopt.
- Processing fees – It is the fee charged on the loan amount and is payable while filing the loan application. This is non-refundable and covers the costs of determining the loan eligibility of the potential borrower. Some banks charge a flat processing fee.
- Charges for Late payment – If there is a delay in paying EMIs, banks levy a late payment fee. This can be checked in advance to avoid any surprises later.
- Pre-payment flexibility/ Foreclosure – If EMIs are paid before the tenure is complete, banks normally charge a pre-payment fee, which will possibly be in the range of 2- 5% of the outstanding loan amount. There could also possibly be a lock-in period, only after which can one request for foreclosure.
- Cheque bounce charges – If you have provided PDCs (post dated cheques) and it is not honored by the bank on account of insufficient funds, you are charged a penalty.
It is suggested that you do your groundwork well. There are multiple banks and NBFCs (non-banking financial companies) that offer Personal Loans today. Hence, evaluate the options that are available to you.
Our experts at MyMoneyMantra can help you bag the best deal for you.
Also Read : Credit Score: Your Ticket to a Dream Vacation
To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 60+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.
Talk to our Loan Specialists toll-free at 18001034004 to know more about our products and offers.
The post Here’s Your Guide to Getting the Lowest-Interest Personal Loan appeared first on Latest Blog Posts of mymoneymantra.