Personal Loan Comparison Checklist

 

As personal loans (unlike home loans) are unsecured in nature, their interest rates are comparatively higher. Therefore, it’s very important to compare and evaluate different banks and financial institutions’ personal loan offers before going with any one of them. This comparison must be done on multiple parameters including interest rate, approval time, disbursal time, approval success rate, processing fees and no. of documents asked for. It is only when you carry out such comprehensive comparisons that you can arrive at a personal loan deal that not only meets all your specific requirements but also doesn’t put any extra financial burden on your shoulders. Considering the great number of lenders in the marketplace today, doing these comparisons one by one, visiting each and every lender’s website can be a very tedious task. We’ve simplified this process and allow you to compare the best personal loan offers of top-rated banks and NBFCs, on multiple (above-mentioned) parameters, all on one page. 

Let’s briefly go over the comparison parameters below:

As a personal loan is normally unsecured in nature, the interest rate offered on it is comparatively higher than secured loans like a home loan. This interest rate is usually between 10.75% and 18.5%, but can sometimes be even higher in case of some NBFCs. The exact interest rate offered by the lender would also depend upon the loan amount, tenure and eligibility of the applicant. Majority of the banks and non-banking financial corporations have their own unique classifications and methods based on which they calculate their interest rates.

First of all, please note, a pre-approved personal loan from a bank or NBFC doesn’t guarantee disbursal of the same loan amount. A personal loan application is normally processed anywhere from 24 hours to a week’s time, depending upon the information provided by you. The quicker you’re in providing documents, the shorter will be the time period in which your personal loan will be approved and processed.

The sanctioned personal loan amount is usually disbursed in the form of a check that can be either collected from the bank branch/NBFC office or can be mailed to your provided address. The loan amount can even be disbursed in the form of a direct transfer to your provided bank account, through NEFT. The disbursal is done in compliance with the terms and conditions laid out in the sanction letter.

The number and type of documents requested for processing of personal loan applications might differ from lender to lender. However, in general, there’s a certain pre-defined set of documents required based on whether you’re a salaried individual, a self-employed professional or a senior citizen/pensioner.

This refers to the percentage of submitted personal loan applications that are approved by the concerned bank or NBFC. The higher this percentage, the more will be the chances of your personal application getting approved. Normally pre-approved personal loans are sanctioned and disbursed much faster.

The personal loan application processing fee is a one-time non-refundable charge levied by the lending establishment at the time of processing the loan application. This is either a fixed amount pre-defined by the lender or a certain percentage, usually ranging from 0.25% to 1% of the applied-for loan amount. Some banks and NBFCs might also offer zero processing fee offers from time to time as a part of their promotional campaigns.

Reserve Bank of India (RBI) had introduced MCLR (Marginal Cost of Lending Rate) in April, 2016 to do away with the complaints that banks and NBFCs took a long time to pass on the reduced RBI interest rate benefit to the loan borrowers. However, banks continue to not automatically revise their interest rates based on the rates changes made by the RBI. This parameter tells you whether the lending establishment automatically revises the personal loan interest rate (based on the RBI rate changes) or not.