As per reports published by the RBI in September 2021, the personal loan category in India registered a 12.1% growth to Rs.29.18 lakh crore from Rs. 26 lakh crore in 2020. This growth represents the rising popularity of this financial product, which can be attributed to its wide range of borrower-friendly features.
Nonetheless, to access the best personal loans in the market, one needs to consider a few pointers beforehand.
5 Steps To Follow To Find An Ideal Personal Loan
To get the best personal loans in the market, individuals can refer to the following pointers –
Step 1: Considering the interest rates
The first step toward finding the best personal loans is to compare the interest rates available in the market. Since the interest rate plays a vital part in determining the total debt amount, it is imperative to find a competitive one to keep borrowing costs to a minimum. Furthermore, since the interest rate on a personal loan is lender specific, one can compare different loan offers to find the lowest interest personal loan.
In this regard, prospective borrowers can take the assistance of an online interest rate calculator.
Step 2: Make a note of eligibility criteria and documentation
In order to qualify for a loan, one needs to meet associated eligibility parameters and submit necessary documents. The same goes for personal loans as well. Hence, intending borrowers can refer to their preferred financier to learn more about these requirements and plan accordingly to ease loan processing and avoid unnecessary delays.
Nonetheless, here are some basic eligibility parameters that one needs to meet in order to qualify for a personal loan –
- Age: 21 to 67 years
- CIBIL score: 750 or higher
- Employment status: Both salaried and self-employed
- Monthly income: As per an applicant’s city of residence
Additionally, one needs to submit the following papers as well –
- KYC details
- Income proof (ITR details, salary slips, business turnover details)
- Bank account statement
A point to here is that the eligibility parameters and documents required to avail of this loan alter with the selection of a lender. Hence, one must refer to specific financial institutions, learn their requirements, and plan accordingly.
Step 3: Learning the loan repayment options
The next step in this process of finding a suitable personal loan option is to learn about its repayment. There are two facets to it: the repayment tenor, and the other is different payment options.
The repayment tenor for personal loans is responsible for deciding their EMIs. Opting for a longer tenor may reduce the monthly installments, but it will increase the total interest outgo and vice versa. Hence, one needs to find a period that will fit his/her financial capability but keep the total debt in check. To get a better understanding, individuals can use a personal loan calculator.
Simultaneously, one needs to keep different repayment options in mind as well to ease this process. For instance, the availability or part prepayment and foreclosure can help borrowers complete their repayment before tenor and save on interest outgo.
Step 4: Understanding the loan application process
The next step in line is to understand the loan application process. Typically, personal loans, being unsecured loans, have a faster loan processing and disbursal process. However, the total time required to complete it will vary from one lender to another. Therefore, to find the best personal loan, one needs to find the shortest time required for loan processing.
Moreover, leading financiers like Bajaj Finserv extend pre-approved offers that play a part in streamlining a personal loan application process and saving time. These offers are applicable to other financial products like credit cards, business loans, etc. Prospective borrowers can check their pre-approved offers by submitting their essential contact details.
Step 5: Considering associated charges
Additional charges like processing fees, legal charges, late payment fees, etc., are an essential part of any loan that a borrower needs to take care of. However, a point to remember here is that these associated fees and charges applicable on a personal loan play a part in increasing the total borrowing cost.
Hence, every prospective debtor should note the associated charges of a personal loan and then plan accordingly.
To sum up, finding the best personal loans can be quite a difficult task as every lender has something or the other to offer. However, keeping the aforementioned pointers in mind can aid individuals in making a sound borrowing decision and finding a loan offer that meets their requirements and fits their repayment capacity. Moreover, they must not forget to check a few best tips to take a personal loan to help with their planning.