There are several responsibilities and commitments associated with the process of applying for a personal loan. Therefore, it is logical for you to thoroughly investigate your options in advance. Before taking out a personal loan, you should consider a few serious requirements and the answers to a certain set of queries.
Choosing loans involves making a sustained financial commitment. You run the possibility of losing a few points off your credit score if you miss payments in addition to having to follow a strict repayment plan.
You must be fully informed about the implications of applying for a loan of this kind before doing so, given the high level of risk involved. We have compiled a list of a few questions that you should ask before applying for a personal loan because of this particular reason.
Why is a Personal Loan a Good Choice Among Others?
A personal loan’s main advantage is its ability to rescue you from financial hardship. A personal loan may be less expensive than any credit card because it usually has a lower interest rate. In reality, you may apply for a personal loan for uses such as, to pay off high-interest debt, such as credit card debt.
Almost any goal can be accomplished with a personal loan.
- Unlike Automobile and Housing loans, Personal Loans generally do not require any collateral.
- While some personal loan forms may be more expensive than others, they can still be less expensive than credit cards and other lending options.
- Which Loan Should I Choose?
You should be aware that you have a lot of options available to you in the current market. Even if you have determined that you have to go with a personal loan, the type of loan you need to take depends on your needs and situation. It additionally depends on how you plan to utilize the money, from festival loans to travel loans, wedding loans to NRI loans, and home remodelling loans.
Best Personal Loan Offers in 2024
Lender Name | Rate of Interest (R.O.I) | Processing Fees | Loan Amount | CIBIL Score |
Paysense Personal Loan | 18% – 22% (Reducing Per Annum) | 2% – 5% | 50.00 k – 10.00 Lacs | 700 |
Werize Personal Loan | 15% – 22% (Flat Per Annum) | 3% – 5% | 30.00 k – 5.00 Lacs | 650 |
Money View Personal Loan | 17% – 36% (Reducing Per Annum) | 1% – 5% | 5.00 k – 5.00 Lacs | 650 |
IDFC Bank Personal Loan | 10.49% – 22% (Reducing Per Annum) | 1% – 4% | 1.00 Lacs – 40.00 Lacs | 700 |
Incred Personal Loan | 16% – 33% (Reducing Per Annum) | 1% – 5% | 50.00 k – 10.00 Lacs | 650 |
Aditya Birla Personal Loan | 12% – 28% (Reducing Per Annum) | 1% – 4% | 1.00 Lacs – 50.00 Lacs | 650 |
Finnable Personal Loan | 16.95% – 30% (Reducing Per Annum) | 1% – 5% | 50.00 k – 10.00 Lacs | 700 |
Hero Fincorp Personal Loan | 9.5% – 16% (Flat Per Annum) | 1% – 5% | 50.00 k – 10.00 Lacs | 700 |
Muthoot Finance Personal Loan | 14% – 22% (Reducing Per Annum) | 1% – 3% | 1.00 Lacs – 7.50 Lacs | 685 |
Upward Fintech Personal Loan | 18% – 32% (Reducing Per Annum) | 2% – 5% | 25.00 k – 5.00 Lacs | 650 |
Cashe Personal Loan | 1.5% – 3% (Fixed Monthly) | 1.5% – 2% | 10.00 k – 4.00 Lacs | 550 |
Finzy Personal Loan | 10.99% – 18.99% (Reducing Per Annum) | 1% – 3% | 1.00 Lacs – 10.00 Lacs | 700 |
Fibe (formerly EarlySalary) | 15% – 30% (Reducing Per Annum) | 1% – 2% | 8.00 k – 2.00 Lacs | 550 |
Faircent Personal Loan | 25% – 30% (Reducing Per Annum) | 7% – 9% | 50.00 k – 10.00 Lacs | 700 |
Stashfin Personal Loan | 2.45% – 4% (Fixed Monthly) | 2% – 2% | 5.00 k – 5.00 Lacs | 725 |
Tata Capital Personal Loan | 10.5% – 14.25% (Reducing Per Annum) | 0.75% – 2% | 75.00 k – 25.00 Lacs | 720 |
Standard Chartered Bank Personal Loan | 11.49% – 20% (Reducing Per Annum) | 1% – 3% | 1.00 Lacs – 1.00 cr | 740 |
Bajaj Finserve Personal Loan(Prime) | 13.5% – 15% (Reducing Per Annum) | 0.5% – 1.5% | 1.00 Lacs – 35.00 Lacs | 685 |
Axis Bank Personal Loan | 11.15% – 16.25% (Reducing Per Annum) | 1% – 4% | 1.00 Lacs – 40.00 Lacs | 690 |
ICICI Bank Personal Loan | 10.5% – 15% (Reducing Per Annum) | 0.5% – 1.5% | 1.00 Lacs – 1.00 cr | 700 |
Fullerton Personal Loan | 14% – 32% (Reducing Per Annum) | 1% – 3% | 1.00 Lacs – 25.00 Lacs | 705 |
HDFC Bank Personal Loan | 10.25% – 16% (Reducing Per Annum) | 0.5% – 1.5% | 1.00 Lacs – 1.00 cr | 700 |
Shubh Life Personal Loan | 28% – 44% (Reducing Per Annum) | 1% – 3% | 5.00 k – 2.00 Lacs | 650 |
Loan Tap Personal Loan | 11% – 24% (Reducing Per Annum) | 1% – 2% | 50.00 k – 7.00 Lacs | 675 |
KreditBee Personal Loan | 1.5% – 3% (Fixed Monthly) | 5% – 6% | 1.00 k – 3.00 Lacs | 550 |
FlexSalary Personal Loan | 1.5% – 3% (Fixed Monthly) | 300% – 750% | 4.00 k – 2.00 Lacs | 550 |
Mpokket Instant Loan | 2% – 4% (Fixed Monthly) | 50% – 200% | 500 – 30.00 k | 550 |
MoneyWide Personal Loan | 17% – 24% (Reducing Per Annum) | 1% – 3% | 10.00 k – 3.00 Lacs | 650 |
Insta Money Personal Loan | 13% – 36% (Reducing Per Annum) | 1% – 4% | 5.00 k – 25.00 k | 650 |
Kotak Bank Personal Loan | 10.75% – 22% (Reducing Per Annum) | 0.75% – 2.5% | 1.00 Lacs – 50.00 Lacs | 705 |
Cholamandalam Personal Loan | 14% – 22% (Reducing Per Annum) | 1% – 3% | 1.00 Lacs – 35.00 Lacs | 675 |
SBM Personal Loan | 14% – 20% (Reducing Per Annum) | 1% – 4% | 50.00 k – 25.00 Lacs | 700 |
Axis Finance Personal Loan | 14% – 16% (Reducing Per Annum) | 1% – 3% | 1.00 Lacs – 50.00 Lacs | 650 |
Shri Ram Finance Personal Loan | 13% – 16% (Reducing Per Annum) | 1% – 3% | 1.00 Lacs – 25.00 Lacs | 680 |
One Tap Loan Personal Loan | 24% – 36% (Reducing Per Annum) | 2% – 5% | 50.00 k – 5.00 Lacs | 650 |
Credset Personal Loan | 18% – 30% (Reducing Per Annum) | 3% – 5% | 50.00 k – 5.00 Lacs | 650 |
RK Bansal Personal Loan | 1% – 1% (Fixed Per Day) | 5% – 6% | 10.00 k – 50.00 k | 650 |
- How Much is the Interest Rate?
A personal loan’s annual percentage rate (APR) typically ranges from 11% to 22%. According to the financial institution you select and your credit history, the rate may vary between less than 11% and more than 22%.
Due to the wide variations in APR, both the total cost of the loan and your equated monthly installment (EMI) will be greatly impacted. Therefore, before applying for anything, you must be aware of the interest rate. To achieve this, you might request a soft check from the bank and have your credit score checked.
The lending institution will be able to provide you with a precise calculation of the interest rate based on this score. You can then utilize a personal loan EMI calculator according to the same.
- What is the Processing Charge Amount?
Usually lenders charge an advance processing cost of 0.5% to 2%. In certain circumstances, this price may potentially reach 5%. You should make an effort to find out about this expense before applying for the loan because it might quickly add up to a sizable amount.
A Helpful Tip: If the bank where you are seeking your loan has been your consistent provider, you may be able to bargain for a lower processing charge or even ask for it to be waived.
- What Additional Charges Are There?
On top of the interest rate and processing charges indicated above, there are a lot of additional costs associated with personal loans that you might have to pay. Among them are:
- Penalty for Prepayment
- Late Fee
- Documentation Fee
- Charges Associated with Foreclosure
- Legal Fee
To get an idea of how much the loan would cost overall, you need to inquire with the lender to list all such additional fees.
- How Much is the Estimated Loan Amount?
You can request a loan with a certain amount from the bank. However, your loan estimate can go up by a few thousand or perhaps a few lakh rupees when all of the expenses listed above are included in this sum. Therefore, you need to request the loan estimate from the bank so that you are both financially and emotionally ready to pay for it.
- What is Your Credit Score? Is It Acceptable for a Personal Loan?
Before submitting a loan application, you must be fully aware of your existing credit score. Lenders use your credit score, a three-digit numeric representation, to determine how creditworthy you are. It is based on your credit history, which includes details on your past borrowing and repayment patterns.
You may get more favorable conditions and reduced interest rates on your loan with a higher credit score. On the other hand, a poor credit score could make it more difficult to qualify for a loan, which could lead to increased interest rates and other costs. If there are a series of late payments in your credit history, your credit score will likely be lower. This will make it harder to qualify for a loan.
- What Charges Apply to Prepayment?
Prepayment penalties are typically assessed by banks to deter borrowers from repaying their loans before the agreed-upon term expires. The penalty can range from 0.5% to 2.5% of the total amount owed on the loan.
You should be informed of the prepayment fees in advance. Because it’s one of the best strategies to save money on interest while repaying your loan on schedule. If the situation permits, you should use your goodwill to approach the bank and request a reduced or waived prepayment penalty.
- What are the Requirements to be Eligible for a Loan?
Banks often require borrowers to have a strong credit history, ideally with a score of 700 or above, and to be between the ages of 18 and 55. In addition to a secure job, the financial institution would also want a consistent source of income. But occasionally, the lender might also have certain further requirements for qualifying. Check to verify if you qualify for that loan before submitting your application.
- Which Documents Are Needed When Applying for a Loan?
When processing an application for a personal loan, most banks require documentation of your identity, proof of work, and proof of earnings. You should be aware that your bank may want additional documentation, such as your PAN card, proof you’re the owner of your house or place of business, bank statements, a photo, etc.
- What is the Turnaround Time for the Bank to Accept a Loan Application?
Applications for personal loans are well known for receiving prompt approvals. The approval process for the applications often takes less than a day. But sometimes it may take longer. If you require the money right away, you must specify how long it will take.
- How Long Does It Take for the Loan Amount to be Disbursed?
You need to ask the staff at your bank one additional question. Even if the loan amount usually appears in your account in less than three to five days, it is still advisable to find out these details in advance.
We think you now know a few of the important questions you need to ask before applying for a personal loan!
Bottom Line
Taking a personal loan can be a wise choice if you’re looking to finance a big purchase, pay for unforeseen bills, or consolidate debt. It highlights that you can enhance your entire financial health with a personal loan if you plan and make smart decisions.
When utilized wisely, personal loans can be an effective financial instrument. Personal loans can be an efficient means of addressing financial difficulties through debt consolidation, cost management, or funding large expenses.
Taking a loan is simple; however, repaying the borrowed amount could be more difficult. Since personal loans have higher interest rates than most other types of loans, you should think about some things before applying for one. Plus, taking out a loan is the same as taking on debt. This could eventually interfere with your long-term financial plans.