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Beginner's Guide to Personal Loans
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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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With the modern day ease of banking, getting loans is only a cakewalk. Calculating EMIs is also possible adhering to the ready availability of accurate personal loan EMI calculator. However, people still might be intimidated by the technical issues, which work around a loan. So let us go through the various aspects of getting a personal loan.
Basics of Personal Loans
The first thing that you would want to do is deciding the amount you would need. Once that is done you can then move on to the other technical concerns like term period and monthly installments to be paid.
Technical Details
The EMI paid by you will depend on the interest rate as well as the tenure you select. However please keep in mind that there are two types - calculating the rate of interest which is Flat rate of interest and Reducing rate of interest. Flat rate of interest is calculated on your principal amount, EMI’s not compounded whereas Reducing rate is always decreasing as you keep paying your EMI’s through the year. So when comparing between different banks or institutions giving you the personal loan always tabulate these three items- Flat rate, reducing rate, EMI and total amount paid. This is best comparator for you to choose the lowest rate.
Documentation & Customer Satisfaction
Once you have your comparator ready you can choose the bank or firm who is sanctioning the loan. Sanctioning and paper work is very simple these days provided you provide them with all your correct documents. However people do suffer when certain organizations make it look like it is complicated. What you should know is here you are the customer and you are giving them your hard earned money for business, so it is their duty to keep your best interest. If it seems that they are not efficient and your time is not being valued simply back off as there are a dime a dozen places where you would get an online personal loan.
Credit Score
These are various markers or tools that organizations have by virtue of which they check your eligibility to get a loan. However there are very rare cases where one gets refused for one. Do not fret at all as this might just be a mere formality.
NRI Section
This product is also available for NRI’s as well. Documentation might be different than Resident Indians but NRI’s will have no problem in getting a personal loan as well.
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Tax Advantage
There are some loans which have a tax advantage as well. So this comes as an added benefit to some customers. Also there is something called a fore closure rate, which means you can pay off the loan before your tenure but you will be charged for it; 1.5-2% is the acceptable rate. Summing it up personal loan is a very simple venture in today’s world. However please read the loan terms, understand the interest rate applied weather Flat or Reducing and also double-check it on the personal loan EMI calculator available online. Don’t take more than what you need as it will eventually burn a hole in your pocket.
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