Personal Loan: When money is needed in difficult times, then personal loan becomes an easy option. In the changing times, the number of personal loan takers has increased rapidly. However, a cheap personal loan can be taken by keeping some things in mind.
No one knows when the need for money suddenly arises in life. When a lot of money is needed in an emergency, a personal loan is the best option. This is because since it is an unsecured loan, banks charge huge interest on it. However, they give loan immediately. Let us tell you that many banks charge up to 24% annual interest on personal loans. Now the question arises whether it will be a profitable deal to choose a flat interest rate while taking a personal loan or to take a loan at a reducing interest rate. Let us know which of these two is a profitable deal.
Taking flat interest rate is a loss making deal.
Banking experts say that always take personal loan at reducing interest rate instead of flat interest rate. By taking a personal loan at a reducing interest rate, you will have to pay less interest. Let us understand this with an example. If you are taking a personal loan of Rs 5 lakh from a bank at a flat interest rate of 12% for 3 years, then you will have to pay an interest of some Rs 1,80,000. That means your monthly EMI will be Rs 18,889.
Reducing interest rate is a profitable deal
Whereas, if you take a loan of Rs 5 lakh at a reducing interest rate of 122%, then you will have to pay Rs 97,858 as interest. In this way you will save Rs 82,142. By taking home loan at reducing interest rate, your EMI will be Rs 16,607 per month.
This way you can get cheap personal loan
Maintain your credit score at 750 or above. Banks will give cheap personal loans.
Use salary account to take personal loan. Banks provide personal loans to salaried employees at low interest rates.
Compare the interest being charged on personal loans. Take loan from the bank which gives loan at low interest.
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