What Can Be The Best Interest Rates For Personal Loan?
Money is needed by everyone in today's world so that we meet those expenses without any hassles
. Credit is available today in many forms from banks, NBFCs and through private lenders. Various forms of credit include loans such as personal loans, gold loans, educational loans, automobile loans, home loans, mortgage loans, credit cards, etc. Of all mentioned types of loans, personal loans are one of the highly demanded loans.Other loans require that borrower pledge some kind of collateral as security. But personal loans do not require any kind of collateral. They also do not require heavy documentation that is associated with other types of loans. Instead, these require least amount of documentation. Lender will require documents that provide information about gross and net income of the borrower, any loans taken by the borrower. If yes, then the associated EMIs being paid are required to be furnished. Lender will also check the credit worthiness of the borrower before advancing any personal loan.
Another advantage in taking personal loan is that borrower is not required to reveal the purpose behind taking personal loan. Lenders are not concerned about the purpose of the loan. Their concern is limited to 100% repayment of loan amount.
Personal loans can be taken within ranges of Rs.20,000 to Rs.2000,000. But in most cases, eligibility of borrowers is calculated first and the determined amount is advanced.
Interest rates on these loans is another major factor that needs to be looked very carefully. Interest on these loans is charged under two methods. One is the Straight Line or Flat Rate Interest Method and second method is Reducing Interest Method.
" Flat Rate Interest Method: Under this method, interest charged on the principal amount that has been advanced will be charged until the completion of tenure.
" Reducing Interest Method: Under this method, interest will be charged according to the outstanding amount. As the principal amount is being repaid, interest will be charged on the balance amount.
Different banks charge different interest rates which will depend upon several factors such as net income, repayment capability, any pre-existing loans, EMIs thereof being paid, etc by the borrower.
Lenders take substantial risk in advancing personal loans. As no collaterals are collected by the lender, there is high risk of non-recoverability of loans. In order to compensate this risk, high interest rates are charged on personal loans.
Generally, interest on loans from many banks can range between 14-24% depending upon income of the borrower. Interest burden for person with higher income is lower in comparison with person with lower income. The difference is not more than 1-2%.
Today, many banks are offering loans to their customers. A loan can be considered as the best personal loan which charges lower interest rate in comparison to its competitors. It is very easy to search for the best personal loan online. By searching online personal loans one can get the required information about them.
Today, personal loan applicants can obtain required information through websites or portals of banks. Almost all bank portals contain information regarding interest rates and subsequent EMIs on their portals.
There are other options available to personal loan seekers. This is through online financial retailers. Online financial retailers are offering online personal loan calculators as well. With the help of these online personal loan calculators, one can calculate interest as well as EMIs. By obtaining such information borrowers can plan their finances accordingly. Online financial retailers are also offering best personal loan plans of different banks online. Prospective borrower needs to fill online form and submit it. Bank will process the loan and will forward it to the borrower through the retailer. This has been proved to be one of the fastest ways of advancing loans.
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