A personal loan is a perfect way to meet urgent financial needs. But due to multiple offers in the market, it becomes difficult for a layman to make a sound financial decision. So, in this article, we have pointed out some key factors that can help you do a personal loan comparison and choose the right alternative. Keep reading this page.
Do Personal Loan Comparison Keeping the Following in Mind
Comparing loan offers becomes easy online; you could check the loan amount, interest rate, processing fee and other stuff of different lenders in one place. Let’s check how you should compare each of these aspects.
Loan Offer
Usually, the maximum personal loan one can get is INR 20 or 25 Lakh from most lenders. You may find some offering beyond that ticket size. So, you can think of applying for a personal loan at such lenders should you require more than INR 20-25 lakh.
Starting Interest Rate
It is believed that personal loans carry high interest rates, this may not always be true. There are some banks or financial institutions that can offer your loan at a lower interest rate starting from 9.60% per annum. So, do a personal loan comparison based on this factor.
Because when the starting rate of interest of a personal loan is already 13.00% or 14.00% per annum, it will be difficult to expect a lower payout. There are banks such as SBI, ICICI and HDFC that offer you personal loans at 9.60%, 10.50% and 10.50% per annum, respectively.
Repayment Period
Usually, customers prefer the lender that offers them a longer tenure option. This is because it gives more flexibility to the applicant to repay the loan. The longer the repayment period, the less expensive the EMIs will be. Two such banks that offer you a longer tenure on personal loans are SBI and ICICI Bank where you’ll get an option of up to six years for loan repayment.
Now, let’s see how a longer tenure can be helpful. Well, first it can get you lower EMIs which you won’t get in a shorter tenure. Sunita has borrowed INR 5 Lakh at an interest rate of 11.20% per annum and paying an EMI of INR 23,350. Well, she has to pay this EMI for at least 2 years. On the other hand, Neha gets a personal loan of INR 6 Lakh at an interest rate of 13.00% per annum for a tenure of six years and her EMI is INR 12,044.
As you can see from the above example, the longer tenure helped Neha get lower EMI even though she borrowed more than Sunita. However, Neha’s interest liability is high.
So, do keep in mind the tenure factor while choosing a personal loan.
What Tools are There for You to Do Personal Loan Comparison?
Well, you get access to the EMI calculator using which you can find the best deal out of the available options. Check out the below example to know more.
Kavita is a salaried employee in an MNC, she’s been looking to get a lump sum amount for her wedding. And fortunately, she narrowed it down to two offers – HDFC Personal Loan and Axis Bank Personal Loan.
In HDFC Bank, Kavita gets the following –
- Loan amount – 10 Lakh
- Interest rate – 11.20% per annum
- Tenure – 12 to 60 months
Whereas Axis Bank offers Kavita –
- Loan amount – 9 Lakh
- Interest rate – 11.00% per annum
- Tenure – 12 to 60 months
Note – Kavita is an HDFC Customer, so she gets the benefit of a pre-approved loan.
In the calculator, Kavita enters both the loan details for comparison –
Axis Bank –
EMI – INR 23,261
Interest – INR 2,16,527
Tenure – 48 Months
HDFC Bank –
EMI – INR 25,943
Interest – INR 2,45,252
Tenure – 48 Months
Well, considering all the facts and the result of the EMI Calculator and lowest personal loan interest rate, Kavita chooses HDFC Bank due to the instant disbursement of 10 seconds.
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