When you encountered with any of the financial exigencies, there is a loan option available for the people known as Personal Loan. Before availing loan, it is necessary to be well known with the facts to avoid losing so much of the money.

When to take the Personal Loan?

Personal Loans like HDFC Personal Loan are unsecured in nature thus carry high rates of interest with them. So one should consider availing this loan in the following situations:

• When you do not have any asset against which you can avail a loan.

• You are ensured about your cash inflows, and you are sure that you can easily spend the EMI’s on time. Otherwise, you will fall into a big debt trap.

• In times of emergency, one can take this loan takes less time for its processing on the basis of minimal documentation.

• Do not consider to avail the loan for any leisure activity.

What factors determine the loan cost?

Interest rates: While choosing a loan one must consider taking the loan  with affordable rates of interest. Personal Loan Emi Calculator is the only thing that can be used to consider the lowest rates of interest that will be levied on the loan amount.

Processing Fees: Fees that are charged from the consumer to process the loan application is known as processing fees. It varies from around 1% and 2 % of the loan amount.

Prepayment Fee: If a consumer pays the loan EMI’s before the tenure period, bank will charge a nominal fee that varies within a range of 2 % and 5 % of the outstanding loan amount. Usually prepayment is permitted after a certain period of the loan disbursal.

Late payment penalties: If a person does delays in paying off the EMI’s every month, bank charge a penalty fees along with the EMI. It varies in the range of 2 % and 3%. 

Cheque Bounce Charges:

If banks find your cheques getting bounced due to sufficient funds, they charge a penalty of Rs250 and 500.

Documentation Charges:

For the verification of the borrower’s documents, banks charge fees that carry between Rs 500 and Rs 1000.

How to select the best personal loan offer? 

Consider the following factors to maximize benefits:

• Rates of Interest: These factors varies from bank to the bank and it also depend on the assessment of your risk profile.

• Other charges: Do not take interest rates only into consideration. Consider other charges that are stated above as the total cost.

• Loan Amount: Check whether the bank is providing the loan according to your short term needs.

• Loan Tenure and EMI’s:  In the shorter tenure, you will have to pay the high EMI’s and vice versa. If you feel that you will not have heavy amount to pay all of the bulky EMI’s, consider opting for a loan with longer tenure periods. So, consider your monthly budget as soon as possible.

How to ensure to get the best possible rates on unsecured loans?

• Keep an eye on your credit score: Good and clean credit history is the only factor to get the best and cheapest rates on this loan. It is maintained by the CIBIL and is sharable with the banks. Good repayment capacity will ensure the quick loan approval and the cheapest deal on personal debt. 

• Use existing relationship with the bank: If you are an existing consumer of the bank, bank can waive off some charges like processing fees and documentation charges.

Thus following all of the steps can help you in finding the best loan deal.