Which bank provides the best personal loan
Before we get into which bank offers the best personal loan, a quick note for those who are not aware of what is a personal loan. Personal loan is an unsecured loan offered by banks which is the best option when you need immediate cash for any of your personal emergencies such as Marriage, Vacation, Home renovation, to buy electronic goods, medical emergencies etc. Banks and financial institutions are more than happy to approve your personal loan requirement if you fulfill the ELIGIBILITY.
Now, most of us wonder which bank offers the best personal loan, but there is no right answer for this question as it totally depends on Bank’s eligibility criteria, applicant’s age, the company one works for, income, location, existing EMI and so on.
Let’s illustrate this with an example - Amar and Anthony have applied for personal loan of 3lakhs in the same bank. Amar works with Dell, draws a monthly income of 30k, and has 2 yrs experience gets a loan for ROI 17% while Anthony working in a start up earning 60k a month, with 5 years’ experience get loan for 18.5% ROI in the same bank. Though Anthony is earning more than Amar and has more experience gets charged higher rate because he is not with one of the MNC’s. This doesn’t mean Anthony isn’t getting a better deal; rather he might be getting best ROI based on his eligibility.
Let us take one more example to highlight how current obligations of a customer can play a role in determining the rate interest. Shwetha, who has a monthly take home of 40,000/-, got a 7 lakh loan from a Bank at an interest rate of 13% for which she is paying an EMI of Rs. 15927/-. She took this loan with the intention of home renovation in Bangalore. Due to a medical emergency she needed an additional 3 lakh loan. However the bank had a policy that they would advance a loan to maximum of 40% of the obligation and in Shwetha’s case this would be upto Rs. 16,000/-. Now Shwetha has no choice but to explore loan from another Bank where the constraint on existing obligation is a little more flexible. She identified one bank which offered a loan at a ROI of 15% but the obligation cap was 45% of the monthly take home. This implies that Shwetha can get approximately 1.5 lakhs and still has to identify another bank which could meet her requirement. In her search on an online platform such as Cashkumar, she would identify that there are couple of NBFC’s which are flexible on this front but might offer the loan at a higher interest rate. This would be Shwetha’s best bet as money is critical and she for sure would not have the time to do the paper work with different banks. The icing to the cake is that Shwetha can pre-close this loan with the NBFC at no additional charges anytime after 1 month.
It’s a very usual practice to only consider the interest rate to decide if one is getting a better deal. However, other than interest rates banks also charge processing fees, stamp duty, pre closure penalties etc while sanctioning the loan. These charges differ from one bank to another. Let us illustrate an instance where a loan at 16% interest rate makes more sense than a loan at 14%. Vijay was planning a trip with his wife to Maldives for which the package was approximately 3 lakhs. This was their first year anniversary and Vijay wanted to make this special. He had only a lakh in his account and did not want to use this up incase case required for any emergency. So Vijay decided to apply for a loan and he explored online platforms such as Cashkumar to identify that multiple banks are offering him a loan at 14% and more. He however identified an interesting option where he could do a part payment as well as pre-close the loan at no additional cost. Having had a phenomenal year at work, he was confident of getting a bonus of approximately 2 lakhs in a month’s time. Using this he could do a partial payment of the loan and also a pre-closure of a personal loan in due course. He went ahead with the bank offering him 17% as that was the best deal for him though it might not have been the best interest rate. It is advisable to be informed about all the fees and charges and consider it while deciding on bank.
Also don’t forget to check out the seasonal, festival or monthly offers by the banks. Some banks have monthly offers on specific companies, profession (doctors), offers for women applicant’s etc. They will be offering lesser rate of interest in such instances and can be a good deal if you fall under any of those categories.
So there is no question of which bank provides best personal loans, Banks provide best rate for the customer who fits into their eligibility criteria and you need to figure out where you fit in while looking for Personal loans. Hope this helps and see you soon in my next article:)
For more information on personal loans, visit us @ Cashkumar
