Thursday, 11 June 2015

6 Smart Tips to Decide Right Lender before Taking / Opting for a Loan

Posted by MyInvestmentsPub
Taking loan is not a bad thing now-a-days as many times we come across a situation for need of money. Be it a home loan, personal loan or vehicle loan, the selection of a lender is an important thing. You need to do some ground work for selecting right lender before taking a loan. You must be always remember that taking a loan is a commitment and a responsibility. Hence you should make sure that the need of your requirement and your ability to repay the loan with in the tenure. Many lenders in the market are offering loans at competitive rates to lure the customers. But your selection of right choice of lender should not depend on mere interest rates. We will see what are the things you should keep in your mind before taking a Loan in this article....


When We Need to Approach for a Loan:


Taking loan is not at all a bad idea. Situations like Medical emergency, buying a plot / house in a strategic location or any other emergency situations may demand you to go for a loan. However, you need to follow a self checklist to analyze the situation for taking a loan. In general, the following checklist you must follow:
Are there any assets like Emergency fund, cash, gold etc. available?
Can I take loan against my Insurance policy?
Can I take Loan against Property?
Can I take Gold Loan or PF Loan?
Can I utilize my Stocks / Mutual funds?

6 Smart Tips to Decide Right Lender before Taking / Opting for a Loan:

Now the next important thing is selection of right lender for taking a loan. If you do not make right choice of lender, you will be loosing your hard earned money in the form of hefty interest rates or any other hidden charges.The following tips would help you to find out the right lender which suits you the most.

Check Online for Competitive Lending rates:

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The Loan Market is very competitive and many new players are entering and making the market highly competitive. Not only the interest rates but also check the tenure of the loan. You can check the websites like LoansBazaar.com, LoanRaja.In, BankBazaar.com, SaareBank.com etc. to compare the loan interest rates with different market players before taking a loan. Apart from the Interest rates, you can also find the reviews or feed-backs on different Lending players which would help you in deciding the right lender. Hence, this is my top priority in deciding the right Lender before taking a loan.

Check for any Hidden Charges:


Some lenders offers cheaper lending rates but their other charges like Processing charges, Services charges might be more. Some times there might be some hidden charges which they will include in the Guidelines. Generally we will not read all the guidelines before signing the papers. So, you should also be wary of hidden charges especially with new entrants in the loan market.


Check for Pre-Payment/ Late Payment charges:

Many lenders offering loans with out any Pre-payment charges or Late payment charges. However, their lending rates might be slightly higher than other players. Though the interest rates are slightly higher, the waiver of Pre-payment charges or Late Payment penalties will make a lot of difference.

Check for Type of Interest Rates:


Many new lenders entering the market with innovative Loan types. Some lenders offering Hybrid Loans where the interest rate is fixed to a certain period and after that the rate is Floating. Some lenders offering Step-up or Step-down EMIs. You should So do some ground work and decide the type of Interest Rate that suits your requirement and the Repayment capacity. This will make a significant difference that makes you more comfort in repaying the loan.

Check the Customer Services:


Some Private players providing excellent customer services like Online support, Expert advise, Toll-free phone services, Periodic Status reports etc. However, there might be some hidden charges or service charges to mitigate the expenses. Some times you may not need all these sophisticated services, but just need some basic services. So, you should check all these services and expenses and should decide the optimum level of services and expenses that suits to your requirements. Now-a-days, almost all lenders are offering online support for all services at free of cost.


Take the advise from Friends or Experts:

You can also take the advises from your friends, relatives or experts in deciding the Lender that suits you most. You will find the practical benefits or problems with the lenders from the existing customers and leverage their experience in deciding the right lender. Taking advice from an expert or a friend will educate you on which lenders are reliable and offer loans at attractive and suitable terms etc.

Conclusion:

There might be some other influential factors in deciding the right choice of lender for taking a loan. But, based on my experience the above are the best tips in deciding your lender. Do not forget your repaying capacity and tenure before applying any type of loan. This will decide your credit score in future.

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