3 Tips For Getting A Financially Sound And Secure Personal Loan

The growth of world trade has increased the gambit of loan providers, and they are on the internet as well searching you as a customer. When you enter your requirement on Google search engine,for instance, you will find a number of websites who would be offering loans through a simple and fast process. The advertising is also done through TV commercials and personal emails. There was a time when personal loans had been just what the name signified, a loan taken for personal purposes. With the increase in investment opportunities, many people take personal loans for investing in businesses like real estate among others and for other financial initiatives through calculated risks.Whatever you need, the tips given below will help you get a personal loan on better financial terms and will help you save costs.

Here Are 3 Tips To Get A Financially Sound And More Secure Personal Loan

Analyze In Depth

You can compare personal loan interest rates online and get it easily. You can also analyze the way your loaning agency charges the interest on your loans to make a better decision.

A personal loan may be charged through different ways. Hence, you should know the way the loan provider will charge the interest rate on your loan. Most often, personal loans are charged according to the flat rate method which charges a loan on the basis of simple interest rate. The rate may vary from one institution to another, from 11% to 15%. In the reducing balance method, the interest rate computation and EMI are equated to loan-spread period EMIs. Here, the interest is charged on the outstanding loan balance.A cost-benefit analysis in this sphere will help you to know which loan will be the best in terms of costs. One other method is the Advance EMI method in which the lender takes 2 or usually 3 EMIs in advance and reduces the principal loan amount. But the interest is charged on the whole loan amount and not on the reduced amount.

Hence, you should analyze how your loan will have interest rate added to it. You can do your calculations to know which loaning agency or loan will be best for you.

Investment in Business

You can take a personal loan for investing in a business proposition after specifying the bank. The 3 most important factors to consider while taking a small business loan include cost, term length, and type. The loans can be compared in lieu of their cost which is signified by annual percentage rate or APR. APR includes the interest rate and the fee (if any). Term length is another important factor as short term loans tend to have higher APRs and vice versa. Short term loans are good when you are looking to fill the cash-flow gap. Long term loans are better when you are trying to start a new project and want a loan for a larger amount. Loans also differ in their types. A line of credit is required when you want to finance your recurring purchases (like the inventory purchases). Account receivable financing is better when you require cash before your invoiced customers pay you. A term loan suits best when the one-time loan is required which can be paid in several smaller amounts later.

Secure versus Unsecure Loans

You can mortgage a property, gold or jewelry and get a loan against it. These kinds of personal loans are termed as secure loans and have a lower interest rate as the lending institutions enjoys interest over the article during the loan repayment period until it is fully repaid. Online websites have an EMI personal loan calculator in India, and you can use them to know the difference.

Vaibhav Dhanawade, a passionate writer on finance is closely associated with several financial companies. The writer wrote this article to educate his readers about the various intricacies involved in loan processing.