7 Things To Look For When Getting A Personal Loan

According to Finder’s personal loan statistics, online lenders have seen dramatic growth past year. 55.87% raise in the number of candidates ready to borrow a personal loan online this year. So, there is tough competition as more and more closed branches and traditional banks have initiated adding online lending platforms to their respective websites and apps.

In a personal loan, you borrow money for personal expenses and plan to repay it over time. A borrower might use a personal loan for moving expenses, debt consolidation, medical bills, wedding expenses, home renovations/repairs, etc.

Despite the advantages, it is best advised to research different personal loan online options. Look for the features enlisted below:

1. Interest rate and Annual Percentage Rate (APR)

A candidate’s personal loan interest rate depends on the amount borrowed. The rate decides the total amount the loan will cost at the end. Usually, the range of personal loan interest rates lies between 10%-28%. The rate varies according to the factors like the current demand for credit or inflation.

Additionally, there is an annual percentage rate of interest in a loan offer. The APR is the sum of interest rates and loan fees. APRs vary depending on a candidate’s credit score.

  • For a good credit score, i.e., 720 to 850, personal loan interest rates typically lie between 9% and 13%. So, customers with excellent credit scores may even qualify for lower interest rates.
  • Generally, APRs on personal loans can reach up to 30.00% for people with average to poor credit scores.
  • People with a credit score below 580 or without a credit history may not get a conventional loan.

One must choose between fixed or variable interest types. Fixed interest rates remain constant, while the variable may increase over time.

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2. Minimum loan amount 

A personal loan amount depends on the lender ranging from whom you are borrowing your sum. Some lenders lend a minimum loan amount of ₹5,000, while some big lenders might offer up to ₹20,000. So, consider checking how the loan amount links to the salary or monthly income. 

3. Fees & Additional Charges

Every loan offer charges fees that can add up with along with time. So it is important to re-check fees before signing a personal loan online. Watch for the different types of fees listed below:

  • Origination fee- An upfront fee for loan processing. This fee is within the range of 1% to 8% of the loan, typically deducted from the money received.
  • Prepayment penalty- Early paying off the loan may incur prepayment penalties on the borrower. So, candidates planning to pay off loans beforehand should know this.
  • Late-payment fee- This fee is charged owing to late payments or having trouble making timely payments.
  • Insufficient-funds fee- A fee can be charged if a person has insufficient money to make loan payments.

Fees can unnecessarily add up and cause stress, so ensure the type of fees required before starting with an option.

4. Collateral

Among the most important benefits of personal loans is that they are unsecured. A candidate does not require any collateral to secure their loan. No need for collateral means faster and more efficient processes.

5. The flexibility of loan terms

The loan repayment period length determines your monthly payment. So, longer repayment periods mean lowered monthly payments. The drawback is that you will eventually pay more in interest.

Choose a timetable for repayment that enables you to make manageable monthly instalments to keep interest charges down. After 30 days of getting the loan, the majority of loan businesses request monthly payments. Moreover, repayment schedules often last between six and seven years.

Also, confirm whether the lender offers flexible options in case of financial difficulties. 

6. Loan Disbursal

Analyse your situation, whether you require money urgently or not. Some personal loan lenders online deliver funds on the day of approval, while others take up to 10 business days. Get the important documents if you want things to go as quickly as possible. Documents include identity, address, income, employment proofs, and guarantor and property documents.

7. Customer Experience 

Always look for a company that gives you a special place to you. A great customer experience is crucial for personal loans. Efficient lenders strive to provide borrowers a seamless and hassle-free experience. There needs to be an easy online application and quick answers to queries.

Conclusion

A good personal loan lender offers transparency, excellent customer service, flexibility, and competitive personal loan interest rate. Borrowers can ensure a smooth and hassle-free borrowing experience by choosing a lender with these qualities. Choose a lender that lets you manage your loans online or through an app by setting up autopay. 

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