Introduction

A personal loan can be easily borrowed when you need to arrange for finances required for personal needs. A personal loan is a preferred option by many since there is no need to pledge any collateral. There is also no limitation as far as the usage of the money is concerned. It is important to note, however, that borrowing money can increase your debt burdens as it involves interest payments, additional processing fees, and other charges, apart from the principal you borrow. Hence, you need to be prudent in choosing the right personal loans.

While borrowing a personal loan, it makes sense to compare the best offers and make an informed decision. Services like CreditMantri makes it easy to choose the right personal loan offer for you. The site provides you with the best personal loan offers in the market matched to your credit profile. You can check your eligibility online and apply instantly.

Read on to find out how you can compare various personal loan offers and choose the ideal offer that suits your requirements.

Tips to Choose Best Personal Loan Option

For choosing the best option of personal loan for yourself, you must begin by identifying the available features, basis which you can start comparing all the available options. Mentioned below are the key features which can help in identifying the best personal loan option:

• Low-Interest Rate: The total amount that you must pay over and above the principal amount of loan is determined by the rate of interest on any loan. Since interest and principal repayment has to be made in the entire loan tenure, it is one of the most important criteria to consider. Best personal loan options generally have very economical interest rates and these will cost you far less while borrowing.
• Interest Computation on Reducing Balance: It is not just the rate of interest but also the method of calculation that impacts the total cost of borrowing. The interest rate on personal loans is generally calculated via two methods, namely, flat balance and reducing balance method. Interest pay-out is typically lower while using the reducing balance method of calculation when both the flat rate and the reducing rate have the same rate of interest. Thus, the ideal personal loan option is the one that uses the reducing balance method while calculating interest.
• Nominal Processing Fees: Processing fees are charged by loan providers based on the total disbursed loan amount. Thus, the lower the processing fees, the more economical it is for the borrower. Best personal loan options have low (ideally Nil) processing fees and these include the administrative charges depending on the loan application.
• Low or Nil Prepayment/Foreclosure Charges: The best personal loan option would allow you to make the loan repayment before the loan tenure completion. You can either make payment in part (which is called partial prepayment) or in full (called foreclosure) at no or least extra cost. When you make a partial or complete prepayment of a personal loan, it allows you to save money related to the interest component of the loan. When banks charge nil or least charges on partial prepayment or foreclosure, there will be more money in your hands.
• Basic Documentation and Fast Disbursal: Personal loans are preferred by most borrowers because of the easy documentation and fast disbursal involved. While choosing one, it makes sense to shortlist based on this criterion.
• Flexible Repayment: A lot of personal loans provide flexible repayment tenure ranging from 12 to 60 months. This flexibility allows you to make EMI payments based on your convenience and with least impact on monthly finances. Sometimes, you can enjoy additional flexibility to repay in bullet payments, especially if your income pattern is in the form of seasonal cash flows.

The above points will help you to select the best personal loan option. However, you must note that in a real-life scenario, there are little chances of getting an option which checks all the stated boxes. Thus, you may have to choose an option which is somewhat close to the ideal personal loan choice. As long as you choose a loan that fulfils most of the criteria given above, you can be assured of making an informed choice from the available options.

Top Personal Loan Providers in India

Types of Personal Loans

Here are some of the common types of personal loans categorised basis end-use:

• Wedding Loan: This loan is best suited for meeting any wedding-related expenses, such as venue booking, catering fees, accommodation charges, etc.
• Home Refurbishment Loan: This loan is ideal when you want to upgrade your home furniture or pay for any maintenance costs in your home.
• Medical Loan: Personal loan can also be sought when you want to meet any costs related to a medical emergency.
• Travel Loan: This loan can be borrowed when you wish to travel around the world without the restriction of limited cash availability.
• Debt Consolidation Loan: This personal loan allows you to repay many small loans and pay a single consolidated EMI to better manage your multiple debts.
• Consumer Durable Loan: This loan is also called a shopping loan. It can be used for buying white goods such as electronics, cell phones, laptops, other expensive goods, etc.
• Instant Personal Loan: This loan is known as a pre-approved personal loan. This loan is offered to existing customers by banks and NBFCs. This loan is preferred by many customers because of no documentation and immediate disbursal.
• Personal Loan Top Up: When you borrow a second personal loan on an existing one, it is known as personal loan top-up. It can be used to meet your additional fund needs.

Wrapping Up

A personal loan is quite handy in helping you meet your emergency cash needs. so, make sure to be aware of the different types of personal loans on the market, compare lenders and choose the right choice.