There comes a time in everyone’s life when they have to borrow money. It can be for making an upgradation in the house, buying a new car, purchasing land, paying for their kid’s college fee, and so on.
A loan can solve your financial problems and lend a hand when you are in a whirlpool of expenses. Loans can be of many types, but personal loans are the best.
Personal loans don’t restrict you from spending your money on the expenses of your choice. Therefore, the liberty you get with personal loans is matchless.
Also, the interest rate on personal loans is often less than what you pay on other common types of loans, such as credit cards.
When getting a personal loan, you cannot and should not go to any lender and ask for the money. Some tips to reach the best personal loan lender are the following.
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Search about personal loans and lender
Your quest for the best personal loan lender should start with searching the internet— the source of all information. Read extensively about personal loans and lending options you have. Get info about loan repayment schedules, repayment terms, and so on.
Search the websites of different lenders present in the market. These lenders often have a loan repayment calculator available on their information page.
A loan repayments calculator can be used to calculate the amount you will repay on a monthly or weekly basis after getting a personal loan. It gives you a jagged idea of what loan repayments will look like after getting your desired loan amount.
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Compare rates offered by various lenders
Before applying for a loan, compare the rates offered by various lenders. You can apply for a personal loan from a bank, online lenders, and credit unions. These institutions often have very different lending rates. So, even if going to a nearby bank and applying for a personal loan without doing research seems like the easiest option, avoid the urge to be careless and languid in this matter.
If you don’t compare the rates, you may get money from a lender who cons you into getting a loan at an exorbitant interest rate. Therefore, there is nothing wrong with knowing about all the available options in the market. Comparing rates makes getting a loan at a cheaper and fair rate a reality.
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Choose the lender according to your financial credentials
Apart from the financial profile and interest rate of the lender, your own financial credentials matter a lot. Not all lenders are ready to serve any client that sets foot in their office.
Some lenders, regardless of the institution they belong to, only entertain clients with a higher credit score and plenty of sources of income. In contrast, some borrowers are ready to cater to clients who come to them with an average or low credit score, though their interest rate might be higher.
So, there is no point in convincing a lender to give you a loan when it is not in their policy to cater to a certain type of client. This exercise will do nothing more than waste your time. Therefore, before approaching a lender with a reasonable rate, check your credit score.
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Choose a lender willing to lend your desired amount
No one applies for a loan without any reason. But if your loan amount is insufficient to fulfill your need and meet your expenses, the whole exercise becomes futile too. When choosing a lender for a personal loan, go for the one who is ready to approve enough loan amount that will surely fulfill your requirements.
In some cases, such as a home refashion project or a family vacation, you are not sure about the actual expense, even after all the estimation. When you get a substantial loan, you can be flexible in your budget estimations.
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Flexible terms of repayment
Some lenders allow you to withdraw the loan amount through installments. In this case, you must pay interest only on the amount you withdraw. As for the EMI, it can comprise the interest amount only. And you can pay the principal in a consolidated form at the end of the total period. This personal loan is ideal for home renovation, where you make scheduled payments to the contractor, designer, and materials. You are also not obligated to pay interest on the amount that does come into use.
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Read the legal document
Each lender has designed a legal document that defines the terms and conditions of borrowing and repayment. So, before you decide to go with a particular lender, read their legal documents and the terms and conditions. Know that all the terms mentioned in this document are binding by the law, so be sure you are okay with them.
Don’t hesitate to ask the company’s representative if you doubt specific clauses and points. If they fail to give you a satisfactory answer, there might be something fishy about the conditions on which they offer a loan. Try to stay away from such devious lenders.
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Processing fees for your loan application
You might be too focused on the interest rate of the loan that you fail to consider the processing fees. Processing fees can further increase the cost of your loan. Therefore, always ask your lender about their fees for processing your loan application and see if this additional expense still makes it feasible to go with your chosen lender.
Often processing fees are two to three percent, exclusive of the GST. This amount is subtracted from the loan amount you get. Consider the processing fee when calculating the loan amount you must apply for. Apart from the processing fee, your lender might be hiding other charges too. Therefore, always ask them to explain all the costs associated with applying for a loan.
Conclusion
Applying for a personal loan is not easier, especially when you consider all the nitty-gritty of the available lending options. Choosing the right lender that offers the best rates and services is essential. Some tips for finding the right personal loan lender are mentioned above; read these tips for making the right choice.
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