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How can you compare different personal loans to decide which one is for you?
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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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A personal loan is a good unsecured financing option when you need funds quickly or urgently, say for a major purchase or for a DIY project you have undertaken, or even to consolidate your debts. Since the application and disbursal processes of personal loans are simple and can be done online entirely, you can get a personal loan within a few minutes. However, before you click on the personal loan apply online button, you should take some time out to compare different personal loans as this could help save on your financial outgo in the long run. Here’s what you need to see:
1. Personal loan interest rate
The personal loan interest rate determines how much the loan will cost you. Hence, this is one of the most important factors to consider when you are comparing different personal loans. While the personal loan interest rate offered primarily depends on your credit score and income, it also depends on the lender’s policies and the relationship you share with them. Make sure you pick a loan with the lowest possible personal loan interest rate to reduce your interest burden.
2. Personal loan tenure
Personal loan tenure plays a huge role in determining what your Equated Monthly Instalment (EMI) amount will look like. The longer the tenure you opt for, the lower the monthly EMI obligation will be, making it more comfortable for you to fit it into your monthly budget. However, the overall interest burden will work out to be higher. Hence, you need to ensure that you opt for a personal loan that is offering you the most favourable tenure according to your needs.
3. Fees and charges
This is another factor to carefully check and compare. Look at all the fees that are associated with taking a personal loan, such as processing fees, late payment charges, prepayment penalties, and more. If the interest rate is low but such fees are significantly higher, then it may not help you save that much money. Hence, make sure that you opt for a loan that offer favourable loan terms including the interest rate and fees and charges.
4. Application process and service
Finally, you should also opt for a personal loan that has a quick and easy online application process. You should opt for a lender whose loan eligibility criteria are simple, and the documents required are minimal. Most importantly, the loan funds should be disbursed into your bank account at the earliest. You should also consider the customer service and support provided since it will also make the process of repaying the loan over the repayment term more convenient for you.
An important tool to compare different personal loans is the personal loan EMI calculator. This is a free and handy tool that you can find on Kotak’s official website to compare different personal loan interest rates, loan tenures, and loan amounts to estimate what your EMI will look like. A personal loan EMI calculator will also help give you an understanding of what your overall interest cost will look like.
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