When you require money right away, personal loans are a practical source of funding you can use. They can be used for travel, tuition, unexpected medical costs, or home repairs. Investing money or short-term financial requirements can be met with personal loans without consuming savings or wiping out long-term investments.
Personal loans come in various forms, including standard loans, quick loans, and loans already pre-approved or qualified for. Online lenders or digital banking services also provide many loan opportunities for professional purposes, such as start-ups and entrepreneurs.
What are some of the things you should consider when applying for a loan?
- Interest rate
One of the most crucial things to consider when evaluating online loan apps Kenya is the interest rates on personal loans. In most case CRB s, there are chances that the interest rates will be different in different institutes. Your rating may also impact the interest rates. Because there is no collateral for personal loans, lenders frequently base interest rates on your CRB score.
- How the interest rate is paid
You may be aware of how interest is calculated as well, if you have tried applying for loan previously. Interest is often assessed using one of two methods: flat balance or declining balance. Even the EMI(Equated Monthly Installment) tenure can be important depending on the loan amount. A longer tenure would result in greater interest payments, raising the total. A short tenure and high EMI would lower interest payments, giving the lender less money.
- Processing fees
When you Buy airtime Kenya or any product online, you are charged a processing charge. Similarly, banks or other providers charge processing fees that range from 2% to 3%. These costs are subtracted from the amount of your loan. While applying for the loan, one could you could ask for a brief calculation of the processing fees or charges involved from the loan organization, as they may vary depending on the loan size or nature. The loan option with the lowest fees would be ideal. Along with the processing fee, you could also discuss any additional administrative or paperwork fees the lender might apply to the loan amount.
- Eligibility criteria
Always make sure the requirements for obtaining a personal loan are simple to meet. This makes the approval and verification procedures easier to complete, which makes securing funding easier. Even though numerous personal loans are available, choosing the best one necessitates extensive research. You may choose the best lender for a personal loan by carefully comparing interest rates, extra fees, and loan payback terms.
- Partial payment or foreclosure charge
When you buy goods or services from any kind of provider, you should always enquire about any foreclosure charges. This also applies for loans online. Understanding whether the lender assesses any penalties for partial prepayment or foreclosure is critical. It may also change, as some lenders may charge a high fee because it would result in them suffering a loss and you paying less interest. While with some institutions, partial prepayment or full prepayment fees would be better off being low or nonexistent. It would imply that you are giving more money away in interest than saving.
- Flexible time
Today, nationalized and private banks and digital lenders provide variable repayment terms ranging from 12 to 60 months, depending on the borrower’s income. So, naturally, if you are someone who has an extensive business plan or just starting out, and will need longer repayment time than what traditional banks provide, opting for online lenders that provide flexible repayment services will make it convenient for you to have a balanced monthly budget.
Therefore, while choosing a financial lender based on offering the lowest interest rates is ideal, other factors must be considered before submitting a loan application. Additionally, you must remember that every loan application lowers your CRB score. And even if you reduce your interest rates, you might give in to other hidden fees, So, before choosing the right lender for you, consider carefully the above mentioned factors and go for the one that fits your needs the most.