Among a wide range of personal loans, it could be difficult to find the best one. Well, the best personal loan is one that meets your financial needs at a lower rate of interest and comes with flexible options. Let’s read more about the best personal loan features so that decision-making can be smooth.
Keys to Find the Best Personal Loan
You’ll know a lender’s loan is best if the same scores the maximum on these below points-
Personal loans are unsecured so you won’t need to submit any collateral. The lender will check your income to see your creditworthiness. A higher income makes an applicant more creditworthy. See what is the lender’s maximum loan limit. A lender with a higher limit will be preferable. And why is that? Because there you’ll get more options for your loan amount. Unlike a lender who has a lower loan limit of INR 5 or 10 Lakh.
Well, it is a deal-breaker in every loan. A low-interest rate has been preferred by customers as that makes them pay less overall. Compare the personal loan interest rates of different lenders and see which has the lowest interest. Because it will make your repayment easier and more affordable.
A low-interest rate implies less burden over the repayment tenure. Because a high rate of interest on a personal loan could result in lengthy repayment and heavy EMI amount. So, if you don’t want to face such hassles, apply for the best personal loan by checking the lender’s interest rate.
Personal loans usually come with a repayment period of 60 months. And it is quite comfortable for the borrower to repay the lump sum amount + interest in equated monthly installments. So, find the lenders who offer you a longer repayment option. There are lenders like SBI and ICICI which offer tenures of up to 72 months for loan repayment.
How is a lengthy repayment helpful? Check out the example below to know it better.
Sneha applied for a personal loan of INR 9 Lakh with an interest rate of 15.00% per annum and a tenure of 6 years. And she’s been paying an EMI of INR 19,031. On the other hand, Ramaya also borrowed a personal loan of the same amount and interest but her lender offers a maximum tenure of 48 months which results in an EMI of INR 25,048.
So, as you can see from the above example, having a long repayment option is always useful to reduce the EMI amount and help you ensure its payment on time.
Part-prepayment and Foreclosure Options
A lender which allows you to part pay or foreclose the loan can also be considered when choosing a personal loan. How? With these facilities, a borrower can close his/her loan early before the end of the tenure. And if you do so, there is a lump sum amount of interest payment saved. To compute the savings, use the personal loan EMI calculator.
To understand this facility of a best personal loan check out the below example –
Karan has been paying an EMI of 12,426 for the past two years for a loan of INR 5 Lakh at an interest rate of 17.00% per annum. And currently, his loan balance is INR 3,48,536. If Karan continues to repay at this rate, he would end up paying interest worth INR 2,45,577. He saved up to INR 4 Lakh through his mutual fund and other investments. So he’s been thinking about foreclosure. Before doing the same he uses the calculator. When he uses the calculator the following information appears –
- Remaining Tenure – 3 Years
- Paid Interest – INR 1,46,768
- Savings = Total Interest Payable – Paid Interest = 2,45,577 – 1,46,768 = INR 98,909
The foreclosure fees will also be levied. For instance, if the fee amounts to INR 15,000, his overall savings would then be INR 83,909