How to choose right Personal Loan

A personal loan could be a savior in times of need. It is an unsecured, collateral-free loan. Banks and NBFC's usually process the loan and disburse the amount speedily if you are found to be creditworthy. One of the major advantages of a personal loan is that the loan amount could be used for any legitimate purpose—the end use is not restricted, making it one of the most flexible loans in the market.

Life is unpredictable, and you might be faced with a financial emergency at any point in life. A personal loan could help you tide over the crisis.

Due to the advantages that this loan product has, the market is flooded with a variety of offers. It is important to choose the loan offer that is suitable to your needs and budget. Here is what you need to know about choosing the right personal loan.

Check the processing fees: Typically, lenders charge 0.50% to 2% of the loan amount as processing fees – this amount is deducted from the loan amount at the time of disbursal. You should know this information beforehand and compare with different lenders.

Check the loan processing time: Check with the bank for the time taken to process a loan, and the documentation required. Lesser the document required, lesser the time it will take to process the loan. Ideally, approach your existing lender – this will make the documentation process easier.

Prepayment charges: This is an important factor and will affect how much you pay as the penalty, should you decide to prepay the loan before the tenure is up. Typically, lenders charge around 2% to 4% of the outstanding amount as the prepayment penalty.

Credit history: Lenders make a loan sanctioning decision based on your credit history and your repayment behavior. If you have no credit history, then lenders will most probably reject your loan application, since they have no data points with which they can verify your credit worthiness. In that case, it is best to approach your existing lender, where you have a savings/salary account.

Apply for personal loan in India

You can check your eligibility and apply for a personal loan by signing up with CreditMantri. It is quick, simple and above all, free.

CreditMantri matches your credit and demographic profile to the lender's lending criteria and presents you a shortlist of only those lenders willing to lend to you based on your unique credit profile. In effect, we pre-screen your application to make sure you are likely to qualify as per the lender's credit criteria. Hence, the chances of your personal loan application getting approved are higher.

Click here to sign up and apply for loans and credit cards, the CreditMantri way!