Loan comparison criteria for personal loans

Personal loans are more like hand loans given by the banks or agencies. They don’t need a valid reasons and documentations like car loans or housing loans. But they do need a monthly income statement and since they are lent on bona fide, they need a trust worthy savings records or income statements.

Interest rate

Personal loans generally have a higher interest rate than the other loans and may vary from 9% to 18% depending on the bank and the scheme. It also depends on the length of payment of the loan. There can be both fixed and variable interest personal loans available as per the agreements.

Process fee and annual fee

Process fee is more like a set up fee that is paid to the lender or agency and would be a part of the loan lent. This is different from the annual fee that depends on the length of payment of loan. They are both not mandatory and are dependent on the bank or the agency.

Loan term

This depends on the borrower and the scheme. This may vary from 1 years to 7 years depending on the banks. But more the loan term, the more is the sum total paid to the bank as it charges interest.

Monthly insalments

The lesser the loan term is, the more the monthly insalments are. The longer the loan term is, the lesser the monthly insalments are.

Prepayment options

A few schemes do not have this option and have a prepayment penalty if you choose to end the tenure with the bank prior to the agreed loan term. While a few banks and agencies relax this rule and have the options open to the borrowers as per the agreements.

There are several professional loan comparison sites on the internet that can help one through the comparison process and help one choose the right personal loan.

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