Some very important factors to consider while arranging for loans
Posted on: 16/Jan/2018 9:05:33 AM
While approaching the banks for loans, it is better to examine the various other important aspects of taking this bank loan apart from the lower interest ratios for the loan.
Whatever be the type of loan - housing loan, vehicle loan, etc., - it is better for the customer to be fully aware of all the important aspects regarding the loan. It is better to analyse in detail about the various aspects – the necessity for the loan, the present capacity to repay the loan, and the existing financial situation – in detail.
Generally, all people seeking loan note the most important aspect of the interest ration for the proposed loan. They also analyse which bank offers the best – lowest – interest rates. However, it is better to look at the overall aspect of the total expenses to be incurred on the loan.
The Annual Percentage Rate – known as APR – includes the above interest and other features. The loan applicant has to obtain this detail from the bank offering loan. This ratio can be easily calculated by the applicant. In the 1st step, multiply the EMI (Equated Monthly Instalment) with the loan duration period. Then deduct the principal loan from this amount. The total interest to be paid will be obtained here. Divide this interest by the duration of the loan repayment. This is the interest ratio. By dividing this ratio by the loan amount, APR - annual percentage rate can be obtained.
By obtaining this ratio, one will be able to compare all the aspects of the loan to be taken including the interest ratio, There are many kinds of fees including the Processing fee, technology fee, administration fee, legal fee, the advance fee, and penalty fee. When these are included in the calculation, the total expenses on the loan will increase.
So, it is better to be aware of all kinds of payments regarding the loan. The penalty payment in case of default of EMI should also be noted.
Conditions
Why selecting the loan, it is also better to know whether the interest is a flexible type or fixed type. Both types of thoroughly checked. In case of flexible interest rate, the loan interest ration will vary according to the trend of the interest ratio. It is rather difficult to monitor the interest ratio. So, the applicant has to take a decision based on the prevailing financial situation.It is also better to be aware of the details regarding how the interest ratio changes are effected.
It is better to read in complete the ‘zero EMI schemes’ offered by the banks. Also, read the news printed in smaller letters which may describe the conditions for the loan.
Rather than superficially checking the details only regarding the interest ratio, it is better to decide based on the total scenario as explained in the above factors and then select the best type of loans offered in prospect.
For this, the applicant has to gather all the above relevant data from many banks. As insisted above, it is imperative to read the loan application details completely and understand them.
