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Which personal loan is good for you?

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It’s easy to get carried away by the many financial products available these days. However, while with most financial products, the consequences of bad choices are short term it’s important to choose wisely when opting for a personal loan. And getting a loan can be one of the most tedious and time-consuming processes in a financial plan. Here are some easy tips that will help you choose the perfect personal loan for your needs.

  1. Compare loan interest rates

The interest rate is the most important part of a personal loan application. You can compare the interest rates offered by multiple lenders, but remember that this is not an exact science. The best way to find the best offer is to compare the interest rates offered by multiple lenders and make sure you’re comparing apples with apples. You can also use a loan terms calculator while comparing two loans. Also compare the interest rates with the interest rates offered by your credit card provider or the interest rate you are paying on your mortgages. The goal is to select the loan provider that is offering a lower nominal rate.

  1. Compare fees and charges

There are many fees and charges that can be included in personal loans such as late payment penalties and administration costs (such as credit reporting agencies). These can be quite costly especially if they are not included in the advertised monthly payment amount! When comparing products, always look for the lowest annual percentage rate (APR) and the lowest fees and charges. Some lenders offer discounts for paying in full or making extra payments early. Always read the fine print on these offers before signing a contract with a lender so that you know exactly what you’re getting into.

  1. Payment flexibility

This is one of the most important factors when comparing personal loans. Look for loans that allow you to make payments whenever you need them, not just on a monthly basis or annually. You might be tempted to choose a small loan because you think you can pay it back in a year, but if something happens that prevents you from making those payments as scheduled (like losing your job), then it could be difficult or impossible to catch up on missed payments later in the year. In such cases, you need to ensure that your loan provider has provisions to offer grace periods or amortization schemes

  1. Look at your credit score

This is a key factor when it comes to getting approved for a personal loan because lenders use it to determine how much they’re willing to lend you. The higher your score, the better chance you have of getting approved for a personal loan with low-interest rates.

If your credit history isn’t great but you still want to borrow money, consider applying online instead of going through an agent or broker — this can save you time and money because there are no additional fees associated with online applications compared to traditional ones. So even if you don’t get the loan you won’t waste money.

  1. Choose an affordable emi

Affordable EMIs are those that don’t have a high-interest rate and are easy on your wallet. So, choose a personal loan with an EMI that falls under your budget and doesn’t make payments too difficult for you to pay back every month. So do not borrow more than what you are earning at the moment because this will only increase your expenses in the long run and make it harder for you to repay the loan amount borrowed in time. You should start by seeing what your monthly expenses are. You’ll need to know how much you’re spending on housing, transportation, food and other essentials in order to get a good idea of how much money you can spend on emis before shopping around for the best rate. While estimating how much money you can pay each month based on your salary make sure you use an in hand salary calculator. You should only estimate your monthly paying capacity based on your salary and not based on your entire salary package because the entire package also includes allowances, bonuses etc.

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