So given the pros and cons of personal loans one should be cautious while he goes shopping for such a loan. He should know what exactly to look for in the market.

Examine your personal loan

Today all banks and financial institutions are offering personal loans to the borrowers but it is important to note down few tips before you finalize your personal loan lender.

• You should do a detailed market survey of the various options like the interest rates offered, pre-payment charges levied and terms & conditions laid down by the lender.

• Interest rate is the most critical component of all the costs that you pay on your personal loan, so make sure that you grab on the cheapest available option in the market. Some banks calculate interest on monthly reducing basis while others evaluate it on annual basis. It is advisable to ensure that the interest rate is calculated on a monthly reducing basis because the moment you pay your installment, the next month's interest rate is calculated on the reduced amount.

• Equated Monthly Installments (EMIs) sometime come out to be a lot more than what you can afford on a monthly basis. So keep in mind that a lower loan amount will reduce the tenure and also make the EMI fall in your budget. The best way to find out a reasonable option is to get your EMI calculated before you buy the loan and thereby bet on the lowest EMI. You can get your EMI calculated through the personal loan EMI calculator on rupeetimes.com