21 MAY, 2020

Personal loan is an important and flexible financial tool that can come to your aid in times of financial uncertainty. Irrespective of what your requirements are, a personal loan proves to be a convenient way to fulfil all your future plans. Whether it is, debt consolidation, funding a wedding or serving a medical emergency, this kind of loan can be very useful.

It is essential to make the right choice when picking a personal loan. Here are some aspects that you must follow to help you find a suitable personal loan.

Compare the interest rates – The rate of interest on your personal loan will essentially determine your monthly EMI payouts. It is best to compare the rate of interest before putting a mark against any personal loan offering. A lower interest rate will help in covering your repayment much faster. However, ensure that you do not hold a low interest rate as the only driving factor when choosing a personal loan.

Find an affordable EMI – When taking a personal loan, you must be sure of being able to afford the loan repayment. It is essential to be able to pay the installments on time or you could incur penalties. Experts advise the use of a personal loan EMI calculator. The calculator allows you to factor in different aspects such as the loan tenure, rate of interest, processing fees and more to give you an estimate EMI cost.

Check eligibility – A personal loan, like most other loans requires you to meet the eligibility criteria. Understanding the personal loan eligibility requirements well help in availing the right loan and speed up the process. Typically, banks require you to have a minimum income, minimum educational qualification of being a graduate, and minimum work experience of 1 year and more.

Read the fine print – It is easy to get through the loan process without noting down the fine print. However, not reading the documents carefully can cause a disruption in the future. It is important to read the terms and conditions carefully. They must be used to support your decision when taking a personal loan. Additionally, any doubt must be immediately cleared out with the lender.

Note the fees and charges – There are certain fees and charges associated with a personal loan. These fees include processing fees, late payment fees, part pre-payment fees, penalty on cheque bounce and more. Understand the associated personal loan charges well when picking a personal loan.

Additional Read: 4 reasons to let a personal loan take care of your big purchases              

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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.