A personal loan is a loan that is unsecured and is given based upon the creditworthiness of the borrower, rather than by any type of collateral. Personal loans—sometimes referred to as signature loans or unsecured loans—are approved without the use of the property or other assets as collateral and that is why it is more attractive to the applicant and also it helps the lenders to charge an extra fee because of the risk involved with personal loans. The terms of such unsecured or personal loans, including approval and receipt, are therefore most often contingent on the credit score of the individual. To be approved for unsecured loans, a borrower must have a credit score high enough, typically 750 or above. A credit score is a numerical representation of a borrower’s ability to pay back debt and it also reflects an applicant's creditworthiness based on their credit history.
A personal loan is an unsecured loan that one takes to meet his financial needs. A personal loan gives you the flexibility to use the loan amount the way one wants to spend. Also, no collateral or security is required for availing the personal loan.
Before taking a personal loan to consider:
Penalty on late payment of monthly installments
Bank credibility you’re borrowing from.
Customer service and the response of the bank.
Loan tenure.
Tips for choosing the right Personal Loan for yourself are:
Compare Interest Rates of various personal loans
You can go to a bank and find out the interest rates on loans there but it is advised to compare interest rates on personal loans from various banks to arrive at the final decision according to your affordability. You can compare the interest rates of a personal loan of various banks at dialabank also.
Compare the extra charges levied on personal loans
You may get the right personal loan interest rate but there are also other extra charges added to the personal loan such as processing fees, late payment fees, cheque bounce charge, service tax charge, etc., out of these the most important charge is processing fees that are charged between 1% and 3%, so you should check these charges first before you apply for the loan.
Repayment Flexibility of the loan
Most products of personal loans come with full and partial pre-payment charges, which means if you pay off the outstanding amount of your loan before the tenure period ends, you will be charged a small fee. Most banks charge between 2% and 5% of the balance amount left of the loan to be paid, which helps you to reduce your overall debt burden because of the deduction of interest on future payments.
Pick up an EMI you can afford to pay
Make sure you will be able to make regular repayments without any penalties and also close the loan on time by estimating the EMI on your loan by EMI calculator. Dialabank comprehensive EMI calculator allows you to factor in details. The higher a loan amount, more EMI you will pay. Make sure that your total EMI deductions in a month are not more than 50% of your salary.
Apply online in leading personal bank which provide best offers on personal loan:
HDFC personal loan
SBI personal loan
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