In times of financial emergency and cash crunch, instant personal loans can be of great help. Since many banks and non-banking financial companies (NBFCs) offer a wide variety of personal loans and aggressively promote them, getting a personal loan has become much easier and faster. However, if you make a decision in haste and do not choose the right Personal Loan and lender, you might regret it in the future. So, before you apply for instant loan, here are things you should consider when choosing a personal loan lender:
Rate of Interest
It is important to consider the interest rate when choosing a Personal Loan Lender since personal loans have a higher interest rate, which typically ranges from 11% p.a. to 28% p.a. Longer repayment terms can result in a much higher repayment amount. Plus, it is common for banks to entice customers with different offers by marginally reducing the annual interest rate (i.e., 0.20% to 0.50% per year). If your credit history is good and your credit score is high, you can use this as leverage to negotiate a better rate of interest with your bank. Thus, when choosing a personal loan lender, check and compare your total outgo and make an informed decision.
Other Fees
A loan does not only cost you interest. In order to process your loan application, banks or financial institutions charge a fee. These processing fees can range from 1% to 3% of the loan amount and can significantly increase your loan’s cost.
When you have sufficient funds, it is prudent to foreclose your loan to save on interest on future EMIs. If you want to foreclose your personal loan, most banks and financial institutions charge pre-payment fees. Generally, the charges range between 2% and 5%, which makes a big difference, especially when the dues are high. Therefore, when choosing a lender, make sure you take into account all the fees and charges.
Loan Amount
There are limits on how much a lender can lend to the borrower. Thus, before approaching a lender, you should be clear about why you need the funds and how much you need because, depending on your financial needs, a lender should be able to provide sufficient funds at an affordable rate.
Depending on your eligibility and credit profile, the loan amount may also vary. Hence, you should compare different lenders based on the loan amount they offer you and choose the one that offers you a sufficient loan amount at an affordable interest rate.
Processing Time
Nowadays, banks and NBFCs offer different types of Personal loans. As these loans are typically offered to existing customers with good credit histories, Instant Personal Loans and Pre-Approved personal loans can be obtained much quicker than regular personal Loans. In case of an emergency, you may be able to obtain a personal loan instantly from your existing lender or primary bank at an attractive rate of interest.
In some cases, you can obtain an instant loan within a few minutes to 48 hours. As opposed to regular personal loans, which can take up to 15 days to process, depending on the lender’s policies. With the help of an instant personal loan app such as Fibe, processing time is reduced
Customer Service
While taking out a loan is a one-time experience, you will need the lender’s assistance several times. When choosing a lender, many borrowers do not consider the lender’s customer service, but if the service is poor, you may be disappointed later. Therefore, you should choose a lender carefully that has good customer reviews. Online customer reviews can help you make an informed decision.
Transparency and Trustworthiness
Flash advertisements and clever marketing tactics by some loan providers can blur the lines between what loan is best for you. Consider choosing a lender who will work closely with you if times are tough and support you throughout the entire loan process.
A quick loan can be very appealing and convenient, but what happens when life takes an unexpected turn? Thus, the best way to ensure transparency is to ask questions about the loan agreement. If your loan provider is vague or hesitant in any way, consider changing lenders. Your lender should be transparent and open with all information related to your loan.
Conclusion
In times of financial crunch, instant loans can be a great help. Moreover, most banks and NBFCs offer personal loans, so you have plenty of options if you are looking for one. However, to get the best results, make sure you compare different lenders based on the different parameters explained above. When you need funds urgently and do not have any other financial support, a personal loan is the best option. But in many cases, people apply for personal loans for instant gratification and put themselves under stress by making hefty EMI payments. So, think twice and take a personal loan only if you absolutely cannot postpone the purchase of that gadget, jewellery, or luxury item.