Personal loans offer individuals the flexibility to navigate various life situations with ease. Whether it's consolidating high-interest debt, funding unexpected expenses, or pursuing personal aspirations, the significance of personal loans cannot be overstated. However, it's equally important to be cautious while taking personal loans.
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Key factors to consider when taking a persona loan (as compiled Tradofina, an instant credit platform:
Maintain a required credit score
A good credit score is of integral importance in the eyes of lenders to determine your repayment ability.
A fine-looking credit rating displays past behaviour of making loan and credit card payments well on time.
Compare the lenders
Comparing the lenders offering personal loans online is of utmost importance to get the right financial offer.
As we already know, many lenders are available online ready to offer their financial products and services. So, it is important to compare lenders based on interest charges, processing fees, loan amounts, and other terms and conditions.
Know all the loan costs
There can be several costs involved under personal loans, like processing fees, prepayment charges, late payment fees, and more.
Therefore, users must first determine all the costs involved in the process of taking and repaying a small personal loan.
Evaluate repayment ability
Another important consideration to make when applying for a small personal loan is repayment ability.
Customers must evaluate their fixed monthly income, deduct fixed expenditures, and be aware of how much money is left at the end.
One should determine the loan repayment capacity as per this calculation, .
How to get a personal loan at the lowest interest rate?
"Maintaining a high credit rating is key," the Tradofina's spokesperson said.
"Lenders give first preference to borrowers having good credit ratings as reliable individuals who will repay loans on time. Based on this, many lenders charge low interest rates from such borrowers. Therefore, make sure to maintain high credit ratings in the profile and obtain a loan at the lowest rates," he said.
Additionally, improving one's credit history can significantly impact loan terms.
"Consistent, timely payments on previous credit obligations demonstrate financial responsibility and enhance eligibility for favourable loan rates," Tradofina's spokesperson advised.
A look at current personal loan rates of lenders
| Bank | Interest Rate (p.a.) | Processing Fee |
| HDFC Bank | 10.5% p.a. - 24.00% p.a. | Up to 2.50% |
| ICICI Bank | 10.50% p.a. - 16.00% p.a. | Up to 2.50% |
| TurboLoan Powered by Chola | 14% p.a. | 4% - 6% |
| Yes Bank | 10.99% p.a. onwards - 20% p.a. | Up to 2% |
| Kotak Mahindra Bank | 10.99% and above | Up to 3% |
| Axis Bank | 10.49% p.a.- 22% p.a. | Up to 2% of the loan amount |
| IndusInd Bank | 10.25% p.a. - 26% p.a. | 3% onwards |
| HSBC Bank | 9.99% p.a. - 16.00% p.a. | Up to 2% |
| IDFC First Bank | 10.49% p.a. onwards | Up to 3.5% |
| Tata Capital | 10.99% onwards | Up to 3.5% |
| Home Credit Cash Loan | 24% p.a. - 34% p.a. | 2.5%-5% |
(Source: Bankbazaar)
(Edited by : Shoma Bhattacharjee)
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