: 6 Easy Tips to Choose the Right Personal Loan for You #IndiaNEWS #Business Personal loans are one of the most popular loan options because of their minimum documentation, quicker loan disbursal, absence

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6 Easy Tips to Choose the Right Personal Loan for You #IndiaNEWS #Business
Personal loans are one of the most popular loan options because of their minimum documentation, quicker loan disbursal, absence of end-usage restrictions on loan proceeds, and non- requirement of collateral or margin. However, with scores of banks and NBFCs offering personal loans with widely varying interest rates based on the applicants’ job profiles, credit scores, employer’s profile, monthly incomes, etc, choosing the optimum personal loan can be a tough task for many.
Let us walk you through some of the tips for choosing the right personal loan:
Check with banks and NBFCs with which you have loan, deposit or credit card accounts
Most lenders offer preferential interest rates to their existing customers. Therefore, those looking for personal loans should first look into personal loan schemes offered by bank and/or NBFC with which they already have a deposit, loan or credit card accounts. Their personal loan interest rates and other loan features can be used as a benchmark against which interest rates offered by other banks/NBFCs can be compared.
Choose your tenure according to repayment capacity
Opting for longer repayment tenure reduces the EMI burden but increases the total interest cost of the loan. The situation would be inversely proportional for borrowers choosing shorter tenures. Hence, the applicant should choose his loan tenure primarily on the basis of his repayment capacity. However, prospective personal loan borrowers should not sacrifice their monthly contributions or existing investments meant for achieving essential financial goals to make higher EMI payments.
Note that banks/NBFCs prefer to lend to those applicants whose monthly repayment obligations, including that of the new personal loan, do not exceed 55-60% of their monthly income. Hence, prospective loan applicants can use Paisabazaar Personal Loan EMI Calculator to get the fair idea of their EMIs and opt for optimum tenure based on their repayment capacity. Personal loan applicants exceeding the aforementioned limit can opt for longer repayment tenures or/and lower personal loan amounts to reduce their EMI while submitting a personal loan application.
Compare interest rates offered by other banks/NBFCs
Before applying for a personal loan, applicants should compare the interest rates offered by various lenders. Banks/NBFCs offer different interest rates to different customers depending on numerous factors such as credit score, employer’s profile, occupation and monthly income of an applicant. Some lenders also run special personal loan interest rates offers during the festive season.
Applicants having credit scores of 750 and above have higher chances of getting personal loan application approved and increasingly, at lower interest rates.

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