A personal loan is one of the easiest ways to get funds when you need money in your account to meet your urgent financial needs. It helps you get funds for several things as there are no restrictions on using the money. You can apply for a personal loan from a bank or other financial institutions where you think you can get the required amount.

Since a personal loan is unsecured, the lender performs due diligence on the applicant’s financial profile, such as income, age, existing debts, and credit rating, among others. One of the main advantages of a personal loan is that it is processed quickly and disbursed within days, depending on your eligibility and other criteria.

You can take out personal loans to meet different expenses, including weddings, foreign trips, higher education, medical emergencies, or even home renovations. A personal loan can be useful to expand your business or open a new business if you are self-employed. You also do not need to pledge any asset as collateral to the lender when applying for a personal loan.

One of the most important things when applying for your loan is your credit score. It is a three-digit number between 300 and 900. If your score exceeds 700, you will have almost no problem obtaining a personal loan, but the loan amount will be based on your income and repayment capacity. . You should also ensure that you only borrow the amount that you can comfortably repay through EMIs without delays or defaults.

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However, you should carefully assess your need and check the amount you need. Avoid borrowing more than you can repay within a stipulated time. Choose the term of the loan carefully. It is often between 12 months and 60 months, but some institutions may even offer a longer period.

It is essential to choose the mode of tenure wisely, considering your ability to repay. The longer term means higher interest rate but the shorter term would mean you have to pay higher EMIs. So consider your income and make a decision accordingly.

Another important factor that affects your loan is the interest rate. You should compare different lenders and choose the one that offers you the lowest interest rate. Also, you can consider factors such as disbursement time, prepayment fees, processing fees, and other services that will ease your loan journey.

Also Read: The Fine Print – Want Coverage for Your Home Loan EMIs?

Avoid late repayments. Defaulting on your loan would mean a big hit to your credit score and difficulty in borrowing in the future. Financial discipline is necessary to ensure you get the most out of your loan fund.

The table below compares the latest interest rates from over 20 banks and EMIs for 5 lakh 3 year loans. You can check and decide according to your needs.

Interest Rate and EMI on Personal Loan

Compiled by BankBazaar.com

Note: interest rates on personal loans for all listed public and private banks (ESB) taken into account for the compilation of data; Banks whose data is not available on their website are not taken into account. The table consists of the lowest interest on personal loans (regardless of the loan amount). Data collected from respective bank‘s website as of 09 August 2022. Banks are listed in ascending order on the basis of interest rate, i.e. the bank offering the lowest interest rate on the personal loan is placed at the top and the highest at the bottom. The EMI is calculated on the basis of the interest rate mentioned in the table for Rs 5 Lac Loan with a tenor of 3 years (processing fees and others are assumed to be zero for the calculation of the EMI); The interest and charges mentioned in the table are indicative and may vary depending on the general conditions of the bank. *^for seniors;

^^For government employees and defense personnel; *for doctors.

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