How to select the right personal loan to match your needs?
Life can be full of surprises and expenses. You can be stuck in a financial emergency or may just want to buy an expensive commodity without disrupting your other expenses. Regardless of the reason, personal loans are one of the easiest ways of acquiring quick money and can give you the financial freedom to enjoy life to its fullest.
Personal loans fall under the category of unsecured loans that are collateral-free. The procurement process for such a loan is quite easy and requires minimal documentation. Applying for a personal loan is also very simple. You can either visit the branch of the lender physically or apply online.
However, an important step before applying is to choose the right personal loan. There is a gamut of loans available these days, which can make it difficult for you to choose the right one. Here’s how you can select a loan that is ideal for you:
Selecting the right personal loan
Before you apply for personal loan, there are some checkpoints that you should go through to verify if the loan suits your needs. Apart from personal loan eligibility, suitability must be an essential consideration. You must check for:
- Interest rates
The first thing to consider when you apply for a loan is the rate of interest at which it is being lent to you. Personal loan interest rates can vary depending on several factors, such as your income stability, financial history, etc. The best course of action is to get a loan that has the lowest interest rate. After all, you will have to repay the entire principal amount along with interest.
- Processing fee and charges
Another thing to know before you apply for personal loan is to check for hidden costs that may be levied on you. Personal loans generally come with an administrative fee that you can negotiate. You must also check for rules regarding pre-closure. Some lenders may charge a fee for pre-closure of the loan.
The next big thing to consider is the tenure of your loan. Depending on your requirement and how soon you can pay back the loan, you can pick between a short-term and long-term tenure. Generally, lenders charge a higher interest for long-term loans. However, your Equated Monthly Installment (EMI) amount will be lesser in such cases.
On the other hand, when you opt for a shorter tenure, the interest rate can be lower, but your EMI amount will be higher comparatively. To get a clear idea about your EMIs, you can use a personal loan calculator.
Personal loans are a quick solution to your financial inclusion needs, as long as you pick one that is ideal for you. If you are considering taking a loan, you can check out Tata Capital’s products.
Tata Capital ensures an easy disbursement of personal loans with no collateral and a low rate of interest among many other benefits.