Personal loans provide vital financial support for any reason within a short period of time. The convenience offered by personal loans are not without the associated costs. The interest rates, processing fees, prepayment penalty, administrative charges, document charges, verification charges and other fees make them a pretty costly way to get instant money.
How do we get the best rates for our personal loans? What is the process by which we can save money on interest rates, other fees and associated charges on our personal loans? This question bothers almost everyone who wants or has taken a personal loan. Here are few things, which if taken into consideration while applying for a personal loan can save a lot.
The basics of getting any loan applies to personal loans as well. For all loans if the bank thinks that you are a worthy customer who shows promise by your repayment capacity and fulfills other eligibility requirements completely, they will try to offer the best rates. On the other hand if they find that something which is required is missing from your profile they might impose higher terms, which could increase the cost of your personal loan drastically.
So, in order to get the best rates on your personal loan from your bank you should appear to be a perfect customer. This is not at all difficult.
Ensure that you meet the banks criteria fully
The first thing is to get a grasp on what the bank wants, so that they actually give you a personal loan. What are the eligibility requirements for various parameters like age, employment, income, documents etc. Compare these factors across entire spectrum of banks and try to match your profile with those requirements. Shortlist few banks which match your profile.
Get all the documents ready
Now, call each one of them and tell them about your personal loan requirements. Ask them to send their representatives. Be prepared with all the essential documents like photographs, income tax returns, form 16 if applicable, salary slips, bank statements etc. The idea is to put your best foot forward and make sure that you appear a very credible person to the bank.
Make the banks compete
Once you have done the formalities, ask them about interest rates and other fees associated with the bank and tabulate them. Do this process with at least two banks so that you are able to get the banks to compete. The data should be used to calculate the cost of getting the loan as well as the amount of interest you will pay on your personal loan. Thus you can decide which bank offers the lowest rates.
Read the fine prints carefully
When you decide on a particular personal loan, make sure to read the loan terms, especially the fine prints. Ask clearly about the penalties associated with the personal loan like prepayment penalty, late payment penalty and all other hidden costs. If you find any such thing ask the bank about waiving it, remember banks do negotiate on terms if they find a good customer.