6 Key Points to Consider When Searching for Online Loan Providers

There are a number of reasons why you might be looking for an online loan provider. This can include medical emergencies, wedding expenses, educational expenses, etc. No matter what your reason for availing a personal loan might be, it’s important to make an informed decision. In order to make a smart decision that could impact your finances tremendously, it’s important that you consider some important factors while choosing your personal loan provider.

These days, there are various personal loans available online from different lenders. These personal loan lenders are widely preferred by borrowers as they offer fully online application and disbursal processes. Here are a few key factors to consider when searching for loan providers:

1.Lender’s Reputation

A personal loan will have a long-term impact on your finances as your repayments will be spread out over a period of time. These days, there are a number of players in the personal loans segment, both online and offline. Of course, not all of these lenders are trustworthy. There are lenders that will charge excessive interest rates and/or processing charges without communicating the terms with you. This can cause a lot of unnecessary financial and emotional stress. In order to avoid such sticky situations, consider choosing lenders who have a good reputation and are trustworthy. To get started, you can choose a lender who has been a major player in the market for a long period of time or a brand name that you recognise.

2.Online vs Offline Process

Off late, most lenders offer both online and offline application processes. However, many lenders would still expect you to visit a bank branch in person before processing disbursement. This can be time consuming and not all of us are able to take time off our busy schedules to visit a bank branch. If this is of concern to you, choose a lending partner that offers an end-to-end online process. When you choose a lending partner that offers an end-to-end online process, you can upload all your documents in an accepted format for verification.

3.Interest Rates

The rate of interest for a personal loan is possibly the most important factor associated with your personal loan. Your interest rate, in combination with your loan repayment tenure and loan amount will determine your EMIs, which will in turn determine your finances. When you’re choosing a loan scheme or a lending partner, always consider the interest rate that you’re being offered before zeroing in on your lender. Shop around and find the lender who offers the lowest interest rate on your personal loan as this will help you drive down the overall costs associated with the loan. Additionally, if you're in a position to do so, you should consider negotiating the interest rates.

4.Your Credit Score

When it comes to availing a personal loan, your credit score will have a huge impact on how easily you’re able to avail credit, the interest rates that you’ll be offered and the terms that you will be offered. If your credit score is favourable, you’re likely to get a loan easily, to be offered a lower interest rate and better terms. Better terms can include flexible tenures, lowered processing fees, etc. On the other hand, if your credit score is not very high, you should consider improving your credit score before applying for personal loans. This is because your lower credit score will deter you from availing a good deal on your personal loan borrowing. Apart from that, in case your loan application is rejected, your credit score may dip further down.

5.Processing Fees and Charges

When you’re availing any loan, including a personal loan, your lending partner will impose a few charges. These charges may be recurring or could be a one-time charge. Different charges that can be charged on your personal loan include processing charges, verification charges, Goods and Service Tax, penalties on late payments and non-payments and foreclosure charges. Though these charges seem minuscule in the start, they can quickly pile up and become a huge financial burden. It’s crucial that you understand these charges and how they’re calculated to avoid being caught off guard. Understanding these charges and knowing how they’re calculated will also help you avoid them. 

6.Evaluate your Repayment Ability

A personal loan is one of the easiest and most effective ways to tackle your financial needs as personal loans are relatively easier to avail when compared to other types of loans. Since a personal loan is very easy to avail, there is a chance that we may borrow more than what we’re able to afford. This can put us in a very sticky situation as late payments and non-payments will not only increase your liabilities but will also lower your credit score.

A personal loan is a great financial tool to help you tackle your both expected and unexpected expenses. Although it’s quite easy to get a personal loan these days, it’s important to be mindful and make an informed decision. Consider the above-mentioned factors before availing a personal loan, or any loan for that matter to make a good financial decision that will impact your finances greatly.