Last Updated on March 23, 2023 by hassan abbas
A personal loan is the best option when you need money for an urgent need for a short period. It can be availed for any purpose. A personal loan can be availed by both salaried and non-salaried individuals. A personal loan is an unsecured loan, the lender approves the loan based on the applicant’s information, such as age, income, existing debts, and credit score (CIBIL score), among others.
Unlike a secured loan such as a gold loan, securities loan, or real estate loan, no time is spent evaluating the collateral. There may be different types of loans, depending on the intended use e.g., car loans or 2-wheeler loans, home loans, business loans, etc. However, a personal loan can be used for any type of requirement. Although few banks ask not to use personal loans in share trading. The loan payment can be done from an auto debit facility from your bank account or online payment through Bajaj Finserv app. Out of the mushrooming apps available online which provide personal loans, it is imperative to check each of these before approaching a loan.
Tips to choose the Best Personal Loan:
1. Low rate of interest:
A personal loan can start from 10% and go up to 24% or even more. It varies from the sanctioning bank or NBFC (Non-bank financial institution) from where you are taking the loan. Manappuram has a starting rate of 13% for personal loans. A higher rate of interest would lead to more financial burden and more EMI (estimated monthly income). Therefore, it is essential to choose a banking or lending partner where the interest rate is the lowest. Many banks give a lower rate of interest according to a set criterion they follow which also depends on the CIBIL score.
2. Duration of loan:
Some NBFCs give personal loans for only 12 months, however, many private banks give loans for 60 months. On the other hand, a few nationalized banks give personal loans for 72 months. Manappuram personal loan has a flexible duration of loan payment which ranges from 12 months to 60 months. This duration might be important if you want to reduce the burden of EMI. The lower the EMI, the better it is for your financial health. However, the downside of a longer loan duration is that you end up paying a more cumulative interest.
3. No Pre-closure penalty:
Many banks and NBFCs give the loan for a certain duration. However, if you want to close it on an earlier date, some banks or NBFC would charge a penalty for the pre-closure of the loan. In case you get lump sum money, it is a good decision to close any loan. However, doing it at the cost of paying a penalty is a loss. To avoid this problem, we need to ask about the terms and conditions of the lending organization before the loan is processed. Some nationalized banks like the State Bank of India do not have a pre-closure penalty. Some banks allow pre-closure only after a certain period of EMIs is paid.
4. Low processing fees:
Banks or NBFCs will take processing fees for sanctioning the loan. This can range from 1 to 2.5 % depending on the organization. If you are taking a higher amount of loan, the processing fees can go up. This is usually deducted from the total amount of the loan that is sanctioned to you. However, the tip here is to go to an institution where there are zero processing charges for the personal loan.
5. Prepayment Charges
Prepayment means repaying a loan before its official due date. Either pay the full amount or pay a portion of the repayment. The prepayment option, which is only allowed by certain banks and loan providers, usually requires an additional payment from the borrower and can only be made 12 months after the loan is approved or another fixed duration. Before the personal loan is processed, it is important to check the repayment terms.
A personal loan has come a long way in fulfilling the urgent needs (wedding, hospital bills) or wishes (dream holiday) of an individual. These loans can be disbursed within 24 hours or 7 days on a case-to-case basis. Within minimum documentation and minimum requirements one can avail of a personal loan. One needs to follow these basic tips so that the loan does not become a burden. With these simple tips, you can secure your future using a personal loan. However, the loan payment should be done as per schedule to maintain a healthy credit score. Manappuram and a few other apps would send a reminder before the due date of repayment. Manappuram online payment can be easily used to pay for any EMI that is due.