Personal Loan is an unsecured loan which doesn’t require any security and can be availed for any purpose like marriage, personal use, purchasing consumer goods and Holidays expenditure.

Reasons to go for a personal loan:

• You do not have an asset or security against which you could get a loan.
• You are sure that you will be able to repay the loan EMIs.
• Due to an emergency and you need funds immediately.

How Personal loan helps:

• With no security this is the only loan which would be available to you.
• Essential and emergency need is fulfilled.
• Processing time for a personal loan is shorter than most other loans due to minimal documentation.

Why not to go for Personal loan:

• It is an unsecured loan so if you don’t or may not have the means to repay then you should avoid taking it else you are bound to enter into a debt trap.
• If you have a property which is not already a security for a home loan, you can get a loan against property.

Total loan cost factors: Interest rate is just a portion of cost associated to personal loan. Several charges can be levied which will affect the overall cost of the loan. Following charges should also be considered while comparing this product across banks.

• Processing Fee: Charged from the borrower to process the loan application. It is typically between 1% and 2 % of the loan amount or a flat fee. This fee is to be paid up front with the loan application and supporting documents.
• Pre-payment Fee: If the EMIs (Equated Monthly Installments) are paid before the tenure, banks will normally charge the borrowers a pre-payment fee ranging from 2% to 5% of the outstanding loan amount. Usually, pre-payment is permitted after a certain period of the loan disbursal.
• Late payment penalties: If there is a delay in paying off the EMIs, banks will levy a late payment fee with the EMI (usually between 2% – 3%).
• Cheque bounce charges: If you have given post dated cheques and if any is not honored by your bank on account of insufficient funds (or for any other reason), you will be charged a penalty of Rs.250-500 for cheque bouncing.
• Documentation charges: Charged for verifying the borrower’s documents to processing the loan application. Most banks employ a third party vendor to do this which costs anywhere between Rs. 500 and Rs. 1,000.

Selection of best personal loan offer: To select a personal loan that will offer you maximum benefits, the following factors need due consideration:

• Rate of interest: Differs across banks depending on their assessment of your risk profile. personal loan interest rates affects your total interest outgo.
• Other charges: Take the total cost into consideration as charges other than interest rates are also important (as discussed above).
• Loan amount: The loan amount should cover your financial requirements.
• Tenure and EMIs: For shorter tenure, the EMIs will be higher and vice versa. So if you feel you will not have sufficient funds to pay off high EMIs initially, then this factor becomes very important. On the other hand a shorter tenure might help you close the loan early and at a lesser interest outgo. So decide based on your monthly budget.

For a list of all the offers present in the market which could suite your needs please visit www.deal4loans.com . We would be happy to assist you with comparison to make your selection easier. Also make use of the EMI Calculator onsite to make comparison quicker, easier and more accurate.

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