Tips to compare Personal Loans in India Before you apply

Tips to compare Personal Loans in India Before you apply

To make an informed decision, it’s crucial to compare different personal loan offers based on several parameters. Here, we discuss the top 5 factors you should consider when comparing personal loans in India.

Interest Rate: The Defining Parameter

The interest rate is arguably the most critical factor when assessing personal loans. Even a slight difference in interest rates can significantly impact your total repayment amount. Here’s what you need to know:

Fixed vs. Floating Rates:

Fixed rates remain constant throughout the loan tenure, ensuring predictability in EMIs. On the other hand, floating rates may vary based on market conditions. Choose a type based on your risk appetite and market predictions.

Comparison Rate:

Don’t just focus on the advertised rate. The comparison rate includes both the interest rate and fees, giving a more accurate picture of the loan’s real cost.

Loan Tenure: Flexibility and Repayment

A loan’s duration is its tenure – the period you have to repay the borrowed amount.

Shorter vs. Longer Tenure:

A shorter tenure implies higher EMIs but reduces the total interest paid. Conversely, longer tenures ease your monthly financial burden but might result in higher overall interest costs.

Prepayment Flexibility:

Some lenders allow borrowers to prepay a part or the full loan amount without any penalties. This feature can help save a significant amount in interest if you get a financial windfall or save enough over time.

Processing Fees & Other Charges

Besides interest rates, there are other charges linked to personal loans:

Processing Fees:

Most lenders charge a fee for processing your loan application, usually a percentage of the loan amount.

Foreclosure Charges:

If you decide to close your loan before the tenure ends, some banks might levy a foreclosure charge.

Eligibility & Documentation

Banks and NBFCs (Non-Banking Financial Companies) have specific eligibility criteria based on age, income, employment type, credit score, and more:

Easy Documentation:

Opt for lenders offering swift processing with minimal documentation. Some lenders even offer online documentation for added convenience.

Eligibility Calculator:

Many lenders provide online tools to check your loan eligibility instantly. It helps save time and avoids the disappointment of a rejected application.

Customer Service and Transparency

Last but not least, the lender’s reputation and customer service play a vital role:


The lender should be upfront about all fees, charges, and terms. Hidden charges can be a nasty surprise and raise your borrowing costs.

Customer Reviews:

Check online reviews and feedback. Customers’ real-world experiences can offer insights into the lender’s practices, efficiency, and responsiveness.

Response Time:

Whether it’s for application processing, query resolution, or grievance redressal, the lender’s turnaround time is an indicator of their service quality.

Wrapping up

Comparing personal loans in India requires a comprehensive understanding of the above factors. By evaluating interest rates, tenure flexibility, associated fees, eligibility criteria, and the lender’s service quality, you ensure that you select a loan that aligns with your financial needs and capabilities.

Remember, a personal loan is a commitment. Making an informed choice not only ensures easy management of your debt but also paves the way for a stress-free financial future.

This post was created for the Blogaberry Creative (Monthly) Challenge.