Who is a better lender: Private or Public sector banks?

Naveen KukrejaPaisaBazaar.com

With so many lending institutions in the fray, it can be confusing to choose the right lender. However, no matter whom you finally choose as your lender, knowing a few things before applying for the loan will help you secure a good deal. After all, every paisa saved is a step towards earning a rupee!

Things to keep in mind while applying for loan:-

1. Part-Prepayment and Foreclosure charges:It is essential to check for loan part-payment and foreclosure charges. Certain loans such as home loan do not attract these charges, but banks do levy them on personal or education loans. Further, most banks do not allow part-prepayment in the case of personal loans.

2. Read the section on fees and charges carefully: Reading the entire loan document thoroughly before signing on the dotted line is the ideal thing to do. However, as many of us find the technical language difficult and confusing, we tend to skip this step. I suggest you at least read the section on fees and charges carefully. You should know how much the lending institution is charging you and for what.

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Naveen Kukreja

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3. Loan approval process:The loan approval process depends on the lender, the nature of the loan, interest rate, loan tenure. Don’t consider just one criterion (say approval time or interest rate) when choosing a lender, take a holistic view. Do your research and compare all the options before deciding. It’s your money, make it count!

4. Factor in future liabilities: When applying for a loan, it’s smart to factor in future liabilities that are likely to come your way and decide the loan amount accordingly. You may be able to afford the EMI in your current situation but you never know when things change. Be prepared for life’s unforeseen incidents.

Now that you are aware of what to look out for when applying for a loan, it’s time to consider who is better — a private bank or a public one.

Both public and private banks score equally but — it’s all about finding the lending institution that suits your needs.