I have no idea about others but for salaried people, getting a personal loan is the easiest thing that could happen to them. Such easy is the procedure. You will have several private banks competing with each other in giving you the loan. There are various factors to consider before going for it.
Purpose of the loan?
Yes. This is the foremost factor that you should consider before taking a personal loan. If that is for an emergency situation like marriage, then it is unavoidable.
For medical expenses, it will be good to have an insurance instead of falling into personal loan. A few thousand you spend in a year might save you lacs of rupees.
If you are planning an investment, here is where you need to decide if a loan is really required. That depends on how much you are set to make using the loan amount. The return on investment should be more than the interest you pay.
Interest and Fee/Charges
Most banks give it for 15.5% interest but for certain corporate employees they give it for 14%. If you are taking 2 Lac loan for a period of 5 years, you will end up paying 2.85 and 2.8 lac respectively for the above interest rates. A 5 thousand difference in a period of 5 years is not a big deal.
Coming to the processing fee, for the above said 2 lac, you will be losing 7000 as fee which means you will get only 1.93 lac at hand. This will be told to you only when the loan amount is deposited into your account.
If you confident enough to close the loan before the loan tenure and you are expecting a lump sum in future, go for the banks that does not charge for pre-closure. This will save you the interest.
Alternates to personal loan
Personal loan always should be your last option in money needs as you have various options available.
Medical Insurance
Home Loan
Land Purchace Loan
Auto Loan
If you are not able to get one, for example, if your land is in remote rural area, the chances of getting a land loan in bleak. In such cases, personal loan is the only option. Invest in the land that will be of more value in the future so that you will actually profit out of it.
Verdict: Good or bad depends on your choice. Choose wiser to benefit out of it. Just that loan is given easily, people tend to waste it and keep paying EMI for no good reason!!
Purpose of the loan?
Yes. This is the foremost factor that you should consider before taking a personal loan. If that is for an emergency situation like marriage, then it is unavoidable.
For medical expenses, it will be good to have an insurance instead of falling into personal loan. A few thousand you spend in a year might save you lacs of rupees.
If you are planning an investment, here is where you need to decide if a loan is really required. That depends on how much you are set to make using the loan amount. The return on investment should be more than the interest you pay.
Interest and Fee/Charges
Most banks give it for 15.5% interest but for certain corporate employees they give it for 14%. If you are taking 2 Lac loan for a period of 5 years, you will end up paying 2.85 and 2.8 lac respectively for the above interest rates. A 5 thousand difference in a period of 5 years is not a big deal.
Coming to the processing fee, for the above said 2 lac, you will be losing 7000 as fee which means you will get only 1.93 lac at hand. This will be told to you only when the loan amount is deposited into your account.
If you confident enough to close the loan before the loan tenure and you are expecting a lump sum in future, go for the banks that does not charge for pre-closure. This will save you the interest.
Alternates to personal loan
Personal loan always should be your last option in money needs as you have various options available.
Medical Insurance
Home Loan
Land Purchace Loan
Auto Loan
If you are not able to get one, for example, if your land is in remote rural area, the chances of getting a land loan in bleak. In such cases, personal loan is the only option. Invest in the land that will be of more value in the future so that you will actually profit out of it.
Verdict: Good or bad depends on your choice. Choose wiser to benefit out of it. Just that loan is given easily, people tend to waste it and keep paying EMI for no good reason!!
Well, personal loans are of high significance in different areas and people prefer to apply for a loan for their several reasons. Some of these reasons may include starting a business, buying a home, organizing any event and others. These all purposes may decide the interest rate and the amount to be borrowed as well. The post about different rates and different types of loans is very useful for people applying for loans.
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