5 Things To Know Before Choosing Your Loan Lender
The gap between fulfilling your dreams and giving up on them is often bridged by loans. A loan lender offers a wide range of loans, such as personal, home, auto, and education loans, to name a few. Each loan helps you meet the financial requirements to achieve a particular dream. A home loan will help you buy your dream house, while a personal loan can come in handy to finance a wedding or buy a new gadget. So, how do you choose the lender for your loan?
5 Things to Help You Choose Your Loan Lender
Picking a lender from so many could be challenging; below, we discuss five aspects that can aid you in your decision-making.
- Know your requirements.
Before choosing a loan lender, it is essential to know your requirements well. Understand what you need the loan for, how much you need it, and the loan tenure you have in mind.
If you are looking for a home loan, there are various variants under this category, namely a land purchase loan, a home construction loan, and a top-up loan. Different lenders may offer different terms to each one of them. Research well based on your requirements and look for the lender who offers the best deal for the loan you require. Similarly, a loan lender may have a different maximum term for a personal or home loan. You may prefer a home loan term of 25 years due to your repayment capacity, so you will have to look for lenders who provide a home loan of 25 years. Other factors like the downpayment requirements, prepayment clause, and repayment options also impact your choice of lender.
- Ease of application and processing time.
You apply for a loan for a specific purpose, whether to buy a house or for a personal loan for a medical emergency. If the loan lender takes a long time to process the loan, you may not be able to buy the house you want or take care of a medical emergency.
Check the loan application process and processing time before you approach the lender. The lender websites have details about the application process and the required documents to help you make an informed decision. You can find out about the indicative loan processing turnaround time on the website and decide if it matches your expectations. The loan process should be user-friendly and the documentation process simple, like Piramal Finance personal loans. They offer instant disbursals with minimum documentation and have expert advisors to guide you through the process.
- Interest rates.
Interest rates determine the cost of your loan and the monthly EMI for all loans. The lower the interest rate, the better it is for you, as you will have to pay a lower instalment each month. Even a minor change in the loan rate will impact your loan’s overall cost and the monthly outflow. When you look for a loan lender, focus on this aspect. Having said that, do not fall for gimmicks that promise zero-rate loans, as there is always a catch, and you are likely to get a rude shock once you sign the dotted line. Apart from the rates, find out about the rate type; your loan could be a floating- or a fixed-rate loan. Fixed rates remain the same throughout the loan tenure and do not change. Floating rates depend on the repo rate and may go up or down during the loan tenure depending on how the repo rate changes as per the Reserve Bank of India’s policies.
- Charges, fees, and penalties.
Apart from the interest cost, loans have additional charges too. Loan lenders charge a processing fee for your loan; this may vary from lender to lender. Some lenders charge a flat amount, while others may charge a percentage of the loan amount.
Lenders levy some additional incidental charges as well. These include the penalty for the late payment or an EMI default in case you miss a loan instalment. Some lenders charge a penalty for a loan foreclosure if you choose to prepay the loan before the term ends. Piramal Finance has zero foreclosure penalties for their personal loans, so you can prepay a loan if you have spare funds without worrying about extra expenses.
Assessing all charges you have to pay or may have to pay under certain conditions before choosing the lender will help you save money.
- Focus on the loan lender.
If you need a personal loan, you can talk to numerous lenders around you. While aspects like interest rate, charges, and processing time are crucial for decision-making, you cannot ignore the importance of doing basic research on your loan lender.
Lenders assess applicants before they sanction a loan; you also need to do the same. Find out about their customer service and redressal mechanisms. You do not want to be stuck with a lender who does not address your problems after your loan is sanctioned or during the loan application process. They should be transparent about their charges and the payment process. A visit to the lender’s website or going through customer reviews can help you assess their trustworthiness. Check if they have customer helpline numbers or other forms of assistance. Also, see if they have details about all their charges. Always opt for known and trusted brands for safe and secure loans.
Conclusion
A loan is a liability that helps you meet your goal, but you need to repay it in a disciplined manner. Choosing the right loan lender will ensure that you get the loan effortlessly at competitive rates and are saved from any hassles during the loan tenure. All financial products require careful research; whichever loan you need, spend some time comparing lenders and choose one after detailed analysis.