Some times as is very often the case, uncalled for expenses come to haunt us and we are not prepared financially for them and due to a ease at which loans can be secured this, you may find yourself in a situation where you have ample options to finance your funding requirements.
But as per financial experts, the need of the hour is to go by the funding option depending upon the need for finance, repayment tenure as well as other factors:
Further, the urgency of funds is also or can be a deciding factor for choosing a financing source.
Also, it is to be noted as a host of financial institutions and platforms have come in recent past, they are good to the extent in some or the other way. While some offer competitive rates other offer flexibility or more customer centric product offerings that are in fact easy for the customers to service.
Factors that need to be assessed
Loan requirement: Quickly you need to give a thorough thought to the capital you have in hand, your monthly fixed expenditures, loan requirement for upcoming liabilities. So, if you have huge requirement for funds it shall not be wise for small-ticket loan and vice-versa. While with a smaller loan, you will have to service EMI at a lower rate of interest. Nonetheless, the EMI amount will trend higher as the loan repayment tenure is shorter.
Thus while you will be able to secure a loan, your current requirements will be left unmet.
Loan urgency: Herein if you are in need of quick cash as that might be the case during medical exigencies or around festivities, you can go for online lending platforms as these use advanced technologies from loan original to final process of loan amount disbursal and this is done in a matter of few days as against banks that take a month's time even in cases where you maintain a salary or savings account with the bank.
Flexible loan terms in respect of loan pre-payments: While this feature is a must-have to decrease the outstanding principal amount against the loan amount secured. At the same time, with this available option, borrowers can reduce the interest outgo in the long run. So, what is crucial before choosing between banks and online lending platform is the flexibility of terms as well as interest rate. Also, personalization of loans to meet a varied financial requirement shall also be weighed upon.