June 20, 2024

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Why to always compare personal loans interest rates?

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personal loans interest rates

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Many people are widely utilizing personal loans for the purchase of electronic goods. The most commonly purchased white goods on personal loans are television, refrigerator, washing machine, or air conditioner. The loans can be availed from any of the finance companies or else banks. The banks typically charge an interest rate of 11-24% per annum depending on the lender or even depending on an individual. The borrower can avail of the loans for a maximum tenure of 36 months on the personal loans with a maximum liability of Rs.15 lakhs. The banks do not ask for any proof in case of utilization of funds by the individual. But personal loans are not covered under any income tax exemption as the government only encourages home loans and car loans. The banks may charge a penalty to the lender in case of default or delay of loans. Thus repaying the installments on time is necessary. In the purchase of white goods, many retailers have tie-ups with various banks or finance companies to provide no-cost EMI loans or loans at lower interest rates. In tie-ups, the interest cost is partly borne by the seller to promote the sales of the goods from their showroom.

Personal finance helps boost the economy as it helps get liquid cash in the public’s hands, and the borrower can spend that money to buy white goods or for any other purpose. The disbursement of the personal loans has helped the electronic retailers sell crores of rupees worth of goods to the customer on an installment basis. The loans can be availed on shorter EMI’s as well, like the three months EMI or else six months EMI with nominal interest rates. The banks do quick approval and disbursal of loans in case of personal loans. The CIBIL ratings of the borrowers are given due importance as in case of default of loans; the lenders can be reluctant to provide the loans to the borrowers who have CIBIL scores of less than 700 points. Very few borrowers approve the loans of the applicants who have a lower credit score than 700 points at a higher interest rate being charged to the applicant. The borrower should also have proper salary proof based on which the loans can be availed, as, without income proof, banks do not provide loans to the borrowers.

Why always compare personal loans interest rates?

The personal loans interest rates vary largely as per the banks and NBFC’s whatever they charge to the borrowers. The bank charges interest rates on an average in the range of 9-14% per annum. However some banks or NBFC’s charge interest rates of as high as 18-30% per annum as well. The interest rates sometimes are very highly being charged by some of the NBFC’s. The banks are comparatively charging lower interest rates than the NBFC’s. The exceptionally high-interest rates are being charged by the NBFC’s to such kinds of borrowers who do not have proper supportive documents as per the criteria of the bank or the ones who do not have proper CIBIL scores. Thus the borrower must maintain a proper CIBIL score to avail of loans at lower interest rates from the bank. Also having the proper documentation for the approval of the loans. The borrower should maintain proper and clear transparency while submitting the documents to the lender. The borrower can also negotiate the interest rates for the loans in case of a good CIBIL score. Also, the borrower should do a proper survey of the loan’s interest rates before availing of the loans. Lower interest rates can help the borrower become early debt-free as the lower interest rates mean lower repayment to the bank. The borrower should remember that the loans are being charged with interest rates on a cumulative basis which can lead to higher repayment than the simple interest rates.

Proper verification of the interest rates is very much necessary in case of availing personal loans. The borrower should be aware that the loan’s interest rates are being charged at compounded annual interest rates which are much higher than the simple interest rates. So thus availing of loans at competitive interest rates is very much necessary.

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