A personal loan offers a great way to enhance your quality of life whenever you are in a pinch. Financiers even give immediate approval to personal loans and allow you to enjoy the full sanctioned loan within hours. The best thing about personal loans is that the loan sanctioned has no spending constraints. Meaning, you can use that loan to meet any of your financial obligations. With high competition among the lenders, the only challenging task for you is choosing the best personal loan lender. Here is an exclusive look at how to choose the best personal loan lender.
Check the Loan Amount
Most of the time when someone decides to borrow money, they don’t know how much is actually necessary. You should opt for a lender who gives a substantial amount of loan, sufficient to cover your financial needs. Also, you can choose a personal loan lender who provides more flexibility. Some lenders offer flexible personal loans in which you withdraw the money in parts or when you need them. You will only need to pay the Loan interest on the loan amount you have used. This type of loan is more suitable for home renovation projects. Because you need to make regular payments to different service provides. Moreover, you are not sure of the amount you exactly need.
Compare the Lenders in terms of Interest Rates
Interest rate is a crucial factor when it comes to searching for the best personal loan lender. The rate of interest on the personal loan directly affects the amount of money you will repay. Hence acts as the main determiner of loan affordability. The lender sets the personal loan interest rates based on your credit score and ability to repay. Individuals with a high credit score are typically seen as reliable and often offered lower interest rates. On the other hand, let’s say you have a credit score that is below par. In this case, you are more likely to receive a lesser sanctioned loan. Or even have your application rejected. In whatever way, you should compare the different interest rates, contact the lenders, enquire all the vital information. Based on the info that you get, you choose the best lender that fits your needs.
Consider repayment flexibility
To get the best personal loan experience, you should make sure the loan lender is flexible for repayment. Repayment flexibility allows you to spread the equated monthly installment (EMI) conveniently. This enables you to repay the loan in terms of what you can afford. By doing so, it will reduce the probability of defaulting the loan. Most of the loan-term loan lenders present the loans with partial and full pre-payment charges. Using this you will pay a smaller fee if you pay the outstanding loan before a tenure end. If the tenure comes to an end before repayment of the loan, you will be charged more. Doing these checks is a sure way to get the best personal loan lender for your financial constraints. Some of the banks do not charge any foreclosure fees. But most of them charge about 2 percent to 5 percent of the balance amount.
Compare other Extra Charges
The interest rate of the loan is not the only thing. You need to consider when choosing the best personal loan lender. There are other various fees charged by the bank that you need to look at. Some of these fees include – cheque bounce charges, late payment charges, processing fees, loan cancellation charges. Also include service tax for every service offered by the bank. Among these types of costs, the processing fees are the most significant. Generally, this is between one percent and three percent, depending on different lenders. This amount is deducted from the amount of loan that you are going to receive. Find out the amount that the lender is charging you for loan processing and then ascertain for its affordability. You should hence ensure that you do not select a personal loan lender solely based on a low-interest rate. You must also consider these above said additional fees.
Compare the Eligibility criteria of different lenders
The best personal loan lender should have an easy to meet and simple eligibility criteria. Some loan lenders have a more complicated process that requires so much information making it feel tiresome. Always be on the lookout for an easy eligibility criterion. By doing so, it will decrease the effort needed to get the money. Also, it will speed up the process of verification and approval.
Go through the Fine Print
Every loan lender has a legal document that dictates the terms of your secured loans. You hence need to make sure you go through all the fine print and know your obligations. Ensure that you understand and agree with all the terms and conditions that are spelled out about the loan. In case of any doubts, you should make inquiries with the lender for clarity. However, the fine print is legally binding and should ensure you are contented with the terms.
Consider Prepayment charges and penalties
It is sensible to make partial payments towards your loan and will assist you to pay lower interest rates. However, some loan lenders have strict rules in regards to prepayment and are accompanied by substantial charges. You should hence find out the minimum prepayment amount acceptable from different lenders. This will help you know if you can clear the loan easily and quickly. More so, it is essential to consider the penalties on late payments of EMI.
Consider these factors in choosing the best lender and understand your financial needs well taken care of. Apart from these points, you can also consider the lender’s credibility, the bank customer service, and the loan tenure. Whatever you may decide, make sure to keep your financial abilities and goals in mind so that you balance everything.