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Today, as the World grows, so do our personal needs. And these needs require financial backup. Some of them can be done in installments but few need immediate liquidity. Nowadays, with Tax returns and other investments, it is very difficult to have liquid funds sitting in our personal accounts. We may need a personal loan for our child’s marriage or funding their education or to pay our debts or do renovation in the house or buy a second hand car and even vacations. At times like these, personal Loans are our best option available in the market. Initially, personal loans were offered by Nationalised banks only. But with the growing demands and other financial entities coming up, we now have a wide range of Lenders to choose from

What is a Salaried Personal Loan?

A Salaried Personal Loan is made available for the Salaried borrowers. So if you are currently employed by a company, government or private, for more than 2 years, and earn minimum INR.20,000, then you are eligible for Salaried Personal Loan.

The easiest way to get a personal loan is to contact a DSA, as they give the best loan option according to our needs. Most often, personal loan is the easiest way to to arrange funds quickly and at a short notice to take care of any of our personal needs. The DSA would guide us to the best Lender. But for our knowledge and satisfaction, even we should be aware of the technicalities to look out for to take the best personal loan.

When we shop and compare before taking a personal loan, we usually just compare the rates. But there are other criterias as well which should not be overlooked.

So, listed below are the major factors to consider, before filling out the personal loan application.

1. Interest Rates on Personal Loan

Interest rates of the banks or any financial services, which is giving you the personal loan is important. As even a small percentage of add on interest would add on majorly to your loan amount. The best loan for us is from that bank or NBFC, which gives us the lowest interest rates and feasible EMI options. We must also remember that different banks offer different rates to different customers taking various factors into consideration.

2. Interest Rate on Reducing Balance for Low EMI’s

We should also know the method in which the interest is being charged. Usually, interest is charged in two methods – Flat balance and reducing balance. Depending on the Loan amount, evn the tenure of EMI matters. A longer tenure would mean more interest payouts and thus increasing the amount. Short tenure and high EMI would mean less interest payouts thus less money to the Lender,

    1. Many Banks also charge you interest on the used loan amount only. For example, if we take a personal loan of INR. 10 lakhs for our child’s marriage, and do not know the exact amount which we would need, as payments are made in installments. In such a case, many banks will loan you INR. 10 lakhs in your account. Then, when you take out 2 lakhs for a payment, they will only charge you interest on the INR.2 lakhs which you have used and not on the whole INR. 10 lakhs. Like this, there are various options which we can talk about with the Financial Services providers. Thus, it becomes our Personalized Loan as it is custom made for our use.

    3. Processing Fees  

    All banks or NBFC’s charge a processing fee which may be anywhere from 2%-3%. These fees are deducted from your loan amount. Depending on the loan amount and the relationship with the entity, we may also request for the waiver of processing fees. The best loan option would be the one which charges you less or no processing fee. Also, we must be aware of any other documentation or administration charges which the lender may deduct from the loan amount.

    4. Low Partial Prepayment or Foreclosure Charges for Best Loan

    It is also important to know if the lender charges any partial prepayment or foreclosure penalty. This may also vary, as some lenders may charge a hefty amount as it would mean that you are paying out less in interest and a loss for them. Whereas, with some banks, there would be preferably low or nil partial prepayment or complete prepayment charges. It would mean that you are saving more in your pocket than by giving in interest.

    5. Less documentation and Quick Money on Safe Loans

    Personal Loan is also preferred for our various requirements as it has minimum documentation and the loan is processed within 2-5 days. Thus it helps us to save time as well as take care of our immediate financial needs.

    6. Flexible Repayment Time on Loans

    Now, nationalised and private banks and NBFCs give an offer or flexible tenure for repayment as per the borrowers income, from 12-60 months. This gives us the convenience to balance our monthly budget. Thus  it becomes our personalised loan

    So, while it is best to choose a Financial Lender depending on the lowest interest rates, there are other criterias to be considered before filling out a loan application. We also need to remember that every loan application is a hit on our CIBIL score. And while we may save in the interest rates, we may end up giving in the other hidden charges,