The quickest way to meet emergency fund requirements is to apply for a loan. Such facilities may be secured or unsecured. Secured loans like home or car loans take a longer processing time. However, unsecured loans are not easily available because lenders assume a higher risk by disbursing the amount.
You may consider using your credit card to meet the emergency fund requirement. However, interest rates on credit cards are higher and you may face financial difficulties to pay the bill.
A quick and easy option to meet immediate fund requirements is to apply for a personal loan. These facilities do not require any security and are available for an amount between INR 50,000 and INR 10 lakh. The documents required to apply for the loan are minimal. This ensures the entire procedure is completed within a short period of time.
Most banks and non-banking financial companies (NBFCs) offer personal finance. This may make it difficult for you to choose the best lender. Here are six factors that you must consider before selecting a lender for personal finance.
- Rate of interest
The personal loans interest rates are one of the major factors you may consider while applying for the same. This rate along with the loan tenure is beneficial in calculating the total interest you will pay during the entire period. Therefore, finding the most competitive interest rate is beneficial. Your risk profile and credit history are crucial factors lenders consider while providing the rate of interest. Thus, one of the best ways to ensure you receive the most competitive rate is to improve your credit score.
- Charges and fees
Most lenders levy processing fees, legal charges, and other borrowing costs. Some institutions may also levy certain hidden charges. All these additional fees and charges increase the effective cost of your borrowing. It is important you check all the total charges along with the rate of interest before making your choice. Furthermore, clarify with the lenders if there are any hidden charges that may increase your total cost.
- Repayment duration
The borrowed amount is paid in equated monthly installments (EMIs). You may be tempted to choose longer repayment duration to reduce your EMI. However, longer duration means you pay more interest over the entire period. It is recommended you choose the shortest possible repayment period based on your financial situation to save a significant amount towards interest.
- Flexibility of repayment
The rate of interest, borrowing costs, and repayment period are important factors to consider in order make the right decision. In addition, you must ask the lenders about flexibility to prepay the money without the levy of any prepayment charges. It is recommended you choose a lender that provides you the flexibility to repay the loan amount before the tenure and save the interest cost.
- Late payment charges
While you may never willingly default on an EMI, it is possible that you may miss a few. In case you face a difficult financial situation, you must be able to get your loan restructured without paying any late fees. It is recommended that you speak with the lender before the default to ensure you do not face any severe consequences.
- Customer service
Most financial institutions offer customer helpline numbers to resolve all your queries. Additionally, lenders provide improved services by allowing you to pay the EMI online, thus making it more convenient. It is recommended you check that your chosen lender offers excellent customer service to ensure the entire process is completed without any hassle.
The best way to compare different products offered by various lenders is to check on the internet. You will be able to check everything from interest rates to loan tenure and other terms and conditions. This makes it easier for you to compare and make the most appropriate choice.
So, follow the aforementioned tips and avail of quick personal loans at the click of a button.