Personal loans: Aside from interest rate, these are the other factors one could examine
At the time of applying for a personal loan, borrowers tend to compare the interest rates which lenders charge. While the rate of interest on personal loan is a vital consideration, there are other factors as well which loan applicants could evaluate.
These factors include processing charges, lender’s reputation, hidden charges and the overall experience of procuring a loan.
Other factors to consider
I. Processing charges: When you apply for a personal loan, the lender levies a portion of loan amount as processing charges. In some cases, processing charges could be as high as 5 percent. Therefore, if a bank charges lower interest but higher processing charges.
II. Lender’s reputation: Another key factor that is an important consideration is the reputation of the lender. Typically, one could first approach the known names in banking which would comfortably offer loan on convenient terms.
Else, one could also approach an NBFC (non-banking financial corporation) or a lending service provider (LSP) that are engaged by the entities regulated by RBI (Reserve Bank of India). Read this article to know more about LSP.
III. Hidden charges: Some lenders also impose hidden charges. You may have to read the fine print before signing the dotted line. Additionally, you can use a personal loan EMI calculator to check the actual EMI after factoring in tenure, total loan amount and rate of interest.
If your EMI turns out to be higher than what the calculator indicates, then it means there is more than what meets the eye.
IV. Overall experience: Finally, customer service is another key factor that should weigh your decision of whether to choose a lender or not. You could ask around among your friends, check the reviews on reddit, You Tube, X and other social media platforms.
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