Whether you need a personal loan to get out of a medical emergency situation or to have access to extra funds for a marriage expense, personal loans are highly versatile to fit your need. Personal loans also do not require the need to submit any form of collateral, which makes it easier to be accessible for a lot of people. There are many banks as well as independent financial institutions that offer personal loans with flexible loan tenures and easy EMIs, which makes repayment easier for a borrower. However, with the unlimited options available in personal loans, how do you choose which one is the best option for you? Here is a smart guide to personal loans that will help you decide:
- Choose the Right Bank –The bank you choose to offer you a personal loan can make or break your repayment process. Choose a bank wisely as nobody wants to go through the hassle of a balance transfer to a lower interest rate paying bank. Look for a bank that not only offers flexible repayment schemes but also does not penalize customers on pre-payment or part payment. Look for the processing fees and different penalties your bank will be charging you in different scenarios. Also, look for the interest rate they provide you and whether it is a reducing balance interest or a fixed rate of interest.
- Ascertain your requirement – Don’t get overboard on a higher personal loan approval. It is wise to limit your amount that will suffice your emergency. This is because; personal loans come with the highest interest rates in any loan category. As they are unsecured loans, personal loans are one of the costliest of loans you may take. While the documentation process is relatively easier than other loans; choosing a longer tenure to lower your monthly EMI may not be the right idea. Although you will get the flexibility of repaying the loan at a lower EMI, the amount you will be paying towards the interest is substantial. Therefore, choose to opt for a lower tenure and an amount that you can realistically pay off in the shortest time possible.
- Compare Loans – Before you choose the first bank that approves your personal loan, make a careful comparison on the different banks that are offering personal loans. One of the best ways to compare different loan offerings is visiting an independent financial website such as Letzbank. The website allows you to compare multiple loan offerings by banks in a simple and hassle-free manner that saves your time and energy. You can find everything you need all at one website instead of going through the trouble of visiting every bank site for information.
- EMI calculator – These days you will find it easier to determine your monthly EMI on a loan by accessing a personal loan EMI calculator. This is a novel tool that calculates precisely the amount you will need to pay by simply inputting the loan amount, the rate of interest and the loan tenure. You can input different loan amounts each time to find the best EMI option that will fit your budget. Letzbank has a really efficient personal loan EMI calculator tool that will instantly provide the results that can help you determine your best loan choice.
- Interest Rates – Personal loan interest rates are highest in any loan category and have a broad range that goes anywhere from 12% to 38% per annum. The interest rate that will be applicable to your specific loan application varies upon many factors such as your income, age, existing loans, credit score, etc. A good credit score can almost always ensure a lower interest rate for you. If you have a good repayment history, banks will be more than willing to offer you a personal loan.
- Credit History – Credit history check is a mandatory requirements for all loans, however, when it comes to unsecured loans such as personal loans, it is a very important factor. As mentioned earlier, your interest rates depend a lot on your credit score and if you have a good credit history, your personal loan application will be approved easily. So, it is paramount to make your payments on credit cards and existing loan EMIs on time; as they govern how your credit score will look like.