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When Are Personal Loans a Good Idea?

Did You Know? 

Personal Loan has become judiciously popular amongst the borrowers. It has a higher borrowing limit as compared to the credit card. 

Indeed, a smart move.

These loans are preferably the most feasible options under any circumstances. Let's help you understand this loan in a better way! 

Few loans are marked for a specific purpose such as one may buy a house with the help of a mortgage loan, or one may buy his/her desired car with an auto loan, or you can also pay off your college fees with the student loan. 

The best part is, a personal loan can be used for any purpose. For as long as you have borrowed it for a legal reason, one can do whatever they feel like with the same. 

We at Your Loan Advisors, have created a list of 5 circumstances. have a look!

 1. Consolidate Credit Cards

If you've multiple credit cards that are charged to the maximum limit, then you can easily get a personal loan which will take all the charges into consideration and you can do a solicited one monthly payment. the most intriguing part is the rate of the interest on the loan can be low than the APRs. There is not much risk involved and you can easily repay the loan dues as well!

2. Refinance Student Loans

When you re-finance your student loan, you can feel a sense of relief. The interest rate on this loan might be as 6.8% or even more. This depends upon your loan type and one can easily pay off the loan at a fast pace. 

If you're using a personal loan to pay off your student loans, you need to make sure that you have carefully gone through the precision for opting for a refinance. 

3. Finance a Purchase

This particular option depends upon what is your need and desires. If you are taking a loan, then you need to pay the seller in cash and this will be treated as an ideal option as compared to getting it financed through the seller. First things first, don't ever make any decision related to finance in a hush. Take ample time and get to the spot. Understand what will be the best option for you and take your decision accordingly. 

4. Pay for a Wedding

Weddings are the most common affair that can happen at an unalarmed time. When you take a personal loan for such huge expenses, then you are saving yourself a considerable amount of the charge of extra interest. Along with this, the interest rate is also as low when compared with the credit card.

The Bottom Line

Personal loan is a boon to the mankind, if used with precision. It has many wonders an can work with its magical powers, if given the right circumstances. Let's quote and explain through an example -

Many people don't have enough cash to afford a home which makes a mortgage loan a crucial thing to not to say NO to. Consult with us today or any financial institution that you trust. Weigh all the options and then take a decision wisely. 

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How to compare personal loans efficiently?

The decision to take a personal loan is a huge step in anyone's life. There is lot of responsibility with this decision. The very first thing which comes in your mind after opting to go for a loan would be the selection of a trustworthy and suitable lender. There are no rational advisors who will guide you and suggest one of the best lending institution for your loan as per your requirements. Sector is flooded with lenders and non-banking financial institutions but, you have to research about them before you apply in any of them.

Once you go with a lender, you need to know that it is not just you but, also your family members may have an impact based on your selection. The question is that on which factors someone can compare so many banking institutions? Yes, let us tackle this question for you today. You should take care of certain things while comparing loans. We’re just here to guide you but the decision is actually yours.

Comparison has to be rational and therefore it is important that we compare based on top parameters:

Lending Amount

Every bank or lending institution provides a different loan amount range which they offer as a personal loan to their customers. It is a good idea to ask a lender about their maximum and min loan disbursement amount for a personal loan. Let’s say, if you need a a small amount of loan, then you must find a financial institution which offers lower amounts. There are lenders who offer as high as Twenty six lakhs in a unsecured loan.

You can apply personal loan in this situation.

Rates

When it is about repaying money, how we can forget about rate of interest. Interest rates are different for each bank and hence it is important to look for financial institution which offers best interest rates. We all need lowest interest rate so that our equal monthly installments are low

Its easy to check interest rates of a bank or a financial institution. You just need to Google or logon on their official website. The reason behind this is banks provide various rates as per the credit score of individuals. For example, If you have a history of paying your credit card monthly bills before its due then chances are you'll get a lower rate of interest. The average interest rates range from 9% to 40% based on your credit history

Processing Amount:

To process the application form there is a small percentage service fees which bank charges from the consumer.

These additional charges are known as processing fees.The financial institution decides the percentage of the loan amount as processing fee.

E . g ., if your amount of the loan is 1 lakh and the processing fee is 2%, you'll need to pay 2% of Rs 100,000 (i.e. 2,000) as processing fees.Processing charges percentage is mostly between 1.5% to 2.5Percent of the disbursed loan amount.if your loan amount is significant then processing fees will have an impact on your pocket and hence should be a selecting factor of your lender.

You may like to read how to compare and apply for best personal loans.

Loan Eligibility

Becoming eligible for a unsecured loan is the basic requirement to get a personal loan.There is no point even looking at getting a personal loan if you are not eligible for it.If you haven't checked the eligibility on the lenders website for personal loan, then please check it now.This could be really frustrating because, if this is overlooked because you eventually end up wasting lot of time and effort for nothing

So, our recommendation is to carry out the checks about this first.

Documents Required

Paperwork for a loan can be very frustrating sometimes but submiting your essential documents is important for personal loan approval.Getting documents needed a personal unsecured loan really should not be complicated as it only require ones which we have already like Aadhar card, Tax statements and bank statements.However, we do not have the right documents as per the needs and at times share a different docuement that may not be taken into account by the financing bank.So, peaking into documents section of loan companies gives you an idea of what is needed.

Payback option

Concern with high installments and equated monthly installments is always there when a person takes a loan.Payment of the installments is one of the problems of people.To solve this concern, loan providers have flexible installment options.If equated monthly installments is more that what you could pay off monthly then, make sure you consider lowering your loan amount.This will relieve a lot of tension.

Loan Tenure

EMI calculators are available on all lenders website to calculate your EMI amount based on simple information like loan amount, interest and personal loan tenure.If your salary doesn't allow to pay the equated monthly installments before its due then it is best to either reduce the loan amount or increase the duration of the loan.Most of the financial institutions will let you select the loan term based on your bank statement and salary.Eg, you can choose a flexible duration which ranges between 1 to five years while taking ICICI loan.You can find information on discussion forums and Q/A websites like Answers.com.

Penalty Fees

If you have taken a loan then you've got the intention to payback in timely manner. However, sometimes circumstances in life are not always favorable so because of this you default in payments.Loan companies also understand this situation. That is why there are certain penalty charges which are already fixed by NBFC's because of missed settlement.You must check the penalty charges even if you are are 100% certain on paying the EMI's on time.The charges are decided primarily because financial institutions also suffer a loss due to your late payment. In that case, it's actually a way of ensuring safety from any loss by the loan companies.As we mentioned earlier, penalty may vary from bank to bank and also dependent on your rate of interest and time you have defaulted.All these factors are usually made transparent by nbfc's before providing the personal loan.It's just that we are not fully aware of these and their impact on us.

The only thing which comes to their mind during that time to receive the amount of loan in their kitty.However as an informed customer, we must always research thoroughly in advance.

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