What to check when availing personal loans
There are times, when you may fall short of funds and want it badly to meet your immediate needs. Asking friends, relatives, colleagues, neighbors or even family members can be really odd as the chances of the request being turned down or even being ridiculed at are high. This is where banks and financial institutions have emerged and seen as a savior by those who require loans very badly.
But availing personal loans rather has become alarmingly confusing and also deceptively simple. Among all possible loans available in the market, personal loans tend to showcase such weird characteristic features the most. Trying to determine if a personal loan is required can be somewhat of a task. However, once determined, there are few factors to be taken into consideration and checked out prior to closing on the deal.
Checklist of factors to consider prior to availing personal loans
- Interest rate: Your installment amount is likely to get impacted by the interest rates. At times, it may also impact your repayment duration. These days, there have emerged numerous providers offering wide spectrum of interest rates. Try identifying the best rates on the loans.
- Loan amount: Prior to making the final application for personal loan, determining what amount will be necessary is the basic thing to consider. Lesser amount borrowed will allow easy and quick pay off of the loan amount with interest. Under any circumstances, it will be wise to borrow only essential amount and try to make arrangements for the remaining.
- Repayment period: It is the term during which the principal along with the interest is to be paid to the lender. The repayment period should be kept as much short as possible. But with reduction in repayment period, monthly installment amount will only go up.
- Prepayment option: At times, people may get stuck financially and get that feeling of using fruitfully the money to repay back outstanding loans. If the idea is to pay back the loan prematurely, then many lenders are found to charge additionally for the same. Hence, at the time of application, check out if prepayment charges apply or not.
- EMI (Easy Monthly Installments): It is stated to be culmination of three factors like interest rate, loan amount and repayment period. There are easily available web based loan calculators that will allow you to put in few numbers and come up with an approximate EMI amount that can be paid off comfortably.
- Loan disbursement time: Loans may be required very quickly. Your lender’s speed in disbursing the loan amount may affect your purpose for its application. There are financial institutions that do disburse loan amounts within few hours on approval.
- Lender credibility: Besides banks, there have also come up numerous financial institutions and online sites that do offer loans to eligible candidates. It will be necessary to undertake credibility check to identify that the lender is not any fly-by-night operator.
Therefore, having complete information of the above aspects will allow you to take a wise decision and enjoy getting a loan that can be paid back on time.