Quick unsecured personal loan comes with a high interest rate
Personal loan is one of the most simple and structured ways of borrowing money. Applying for a personal loan has nowadays become a norm for every individual.
There are many reasons why people apply for a personal loan. This type of loan is said to be the costliest loan in the market after the loan against credit card. Rate of interest for this type of loan vary due to many reasons. Generally interest rate of a personal loan lies in between 14% and 25%
Personal loans are considered as short term and unsecured loans. Banks will not take anything from you as surety/guarantor for the amount of loan they approve.
Interest rates depend on your credit history, whether you are employed or not, if employed, the company which you are working for, and many more.
After your personal loan gets approved, money will be credited to your account within 4-8 working days.
You will have to pay the money in EMIs [Equated Monthly Installment]. This will range from 12 months to 60 months EMI repayment. You can choose any number of months with a multiple of 12.
It is always good to choose the lowest possible tenure for a personal loan, to save money on interest.
You want to take a personal loan of Rs. 3, 00,000 and the interest rate is 20%.
If you choose 12 months tenure, your EMI will be Rs.27,790 and you will end up paying Rs.33,484 extra amount as interest. That means, the total amount you pay would be Rs.3,33,484.
If you choose 36 months tenure, your EMI will be Rs.11,149. But, you will end up paying Rs. 1,01,367 extra amount as interest. That means, the total amount you will be paying is Rs.4,01,367.
So, it’s always advisable to take a personal loan with as less tenure as possible to save the interest amount.
Never Foreclose a personal Loan
You should never go for foreclosing a personal loan. Reason is, every bank will charge some amount[approx 3% – 6%] on due principal amount, to foreclose the personal loan. In addition to that, foreclosing is allowed only after atleast 6 months of the loan tenure. However, by the time you finish 6 months, you would have paid a major portion of your interest amount.
Instead of foreclosing the personal loan, you can actually get more if you go for a fixed deposit with the same amount.
So, foreclosing a personal loan is not advisable unless you have any specific reason.
Partial payment is also not allowed for personal loans.