12 February, 2025 | 11:01 IST
Whether it's an urgent home repair, an important life event, a medical emergency, or similar other unforeseen expenses, personal loans provide quick access to funds. Availing a personal loan these days has become easy with the rapidly expanding digital lending sector in India. However, the real challenge is to find out the most suitable loan offer as per your needs.
With so many financial institutions offering personal loans, choosing the right lender and the most appropriate loan offer could be a daunting tax. Many digital lending platforms like Moneycontrol allow access to multiple personal loan offers from various lenders. Through the Moneycontrol app and website, you can apply for loans up to Rs 50 Lakhs from eight lenders. The interest rate starts as low as 10.5% per annum. You can get the loan in three steps: enter your information, complete the KYC process, and set up an EMI term.
Let’s explore how to compare personal loan offers from multiple lenders and identify the best platform for your needs.
Here are several key factors that you should consider before applying for a loan.
1. Interest Rates
This is the most important factor when applying for a loan. It represents the total cost of borrowing including the interest rate as well as any fees or additional charges. A lower APR means the loan will cost you less in interest and fees over time.
Apart from this, each lender offers different interest rates, with options for fixed or variable rates. With a fixed rate, the interest rate remains the same throughout the entire loan term. On the other hand, with a variable rate, the interest rate may change based on market conditions.
2. Repayment Term
The repayment term refers to the duration within which you will repay the loan. It significantly affects both your monthly payments and the total interest paid over the life of the loan.
If you opt for lower monthly payments, a longer repayment term spreading the payments over several months or years could be helpful. On the other hand, a shorter repayment term means the loan will be repaid more quickly, resulting in higher monthly instalments but the overall interest amount will remain low.
Some lenders have fixed repayment tenures, so make sure to review the repayment terms and assess how beneficial the loan will be for you if you choose a specific period.
ALSO READ: What is the maximum and minimum tenure for personal loans?
3. Fees and charges
Each lender charges certain fees, such as processing fees, prepayment penalties, and late payment fees. Before choosing a lender for a personal loan, it's important to review these conditions. Some lenders charge a one-time processing fee, typically calculated as a percentage of the loan amount.
In addition to this, be aware of late payment fees if you miss a loan repayment. When applying for a loan, understand the consequences of missing a payment, including whether the lender offers a grace period or imposes extra charges for overdue payments. Some lenders also impose prepayment penalties, meaning they charge a fee if you decide to pay off the loan early. While paying off a loan early can save you money on interest, lenders may penalize you for doing so, as they lose the interest they would have otherwise earned.
Moneycontrol has partnered with eight lenders to offer fast, fully digital loans up to Rs 50 lakhs. The application process is easy to follow— enter your details, complete the KYC verification, and choose an EMI plan. Interest rates can start as low as 10.5% per annum.
4. Eligibility Criteria
To qualify for a personal loan, consumers must meet specific eligibility conditions set by each lender. Comparing these requirements across several lenders before applying is crucial if you want to improve your chances of being approved and obtaining the best loan terms.
When comparing eligibility criteria for personal loans start by checking the credit score requirement across different lenders. In addition to this, compare minimum income requirements set by the lenders. Also, consider employment stability, as lenders often prefer applicants with steady jobs or a minimum work experience period.
5. Special discounts or offers
Some lenders offer special promotions, such as cashback or reduced interest rates, on personal loans. For instance, they may provide a 0.5% reduction in the interest rate or waive certain fees or annual charges as part of a limited-time offer.
Additionally, many lenders offer discounts, typically around 0.25% to 0.5%, if you set up automatic payments. During peak seasons, such as festivals, New Year, or year-end, lenders may offer special promotions with reduced rates or extra perks to attract more borrowers.
With so many financial institutions offering personal loans, choosing the best offer could be a difficult tax. To make the best decision, it's important to look out for multiple loan options across different platforms and compare the offers from various lenders before taking up a loan. This exercise will help you avoid high-interest loans and hidden charges levied by lenders.
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