Selecting the best personal loan!

Though a personal loan has become one of the most convenient tools for meeting urgent financial needs that can be satisfied through other means there still are some considerations which a borrower must weigh carefully in order to make the best out of the situation. There are several factors in a personal loan which can influence the overall cost borne by the customer in the long run by the time the entire repayment tenure is over. Analyzing and negotiating for the best deal on these factors can result in substantial savings for the customer which could be utilized gainfully elsewhere.

The Interest Rate: This is the most hurting element in a personal loan deal. As compared to other kinds of loans the interest rate in a personal loan are quite high ranging from 16% to 25 % in most cases. The customer has the option of agreeing to a lower rate flat interest or a higher rate reducing balance interest type of personal loan. On an average the reducing balance types are cheaper in the long run though the rate appears higher prima facie. Fixed and floating rates available in the market have their own pros and cons which the customer will have to deliberate upon taking into account the prevailing and the predicted market conditions.

The Loan Amount: The best loan amount that works for you is what is worked out in reverse order by first deciding the EMI amount one can pay every month comfortable without landing up in financial difficulties. Having this as the background to all calculations the exact loan amount cane decided and the tenure and instaleliment worked out.

The Repayment Tenure: Once the amount that is suitable to your requirements and abilities has been worked out the repayment tenure can be then decided keeping in mind the monthly repayment capabilities. One should always endeavor to have the least possible tenure in a personal loan so as to pay the least amount as interest in the end. However this will be in tandem with the worked out EMI in the first place.

The Fees and Charges: The best personal loan that you can avail must have the least possible miscellaneous fees and charges associated with it. There are options where the processing fees can be waived off and the prepayment penalty can be reduced to a bare minimum. One should always opt for personal loans that have minimum possible additional fees even if the rate of interest is a bit higher. This is because the fees if higher in amount will actually take away substantial amount of money right in the beginning which when calculates in the long run would indicate a overall higher rate of interest on the loan amount.

Having considered all these factors the customer will now armed with sufficient inputs to deal effectively and smartly with the financier to bargain the best possible personal loan for himself. The time and effort spent towards researching these preliminary aspects are well worth in terms of actual savings that they will yield in the long run.