A personal loan is a category of loan that goes on to include loans like education loan, vacation loan, and marriage loans. Basically short term loans are the ones which are categorized under personal loans. There is a particular personal loan eligibility criterion that one needs to meet before they can opt for a personal loan. This criterion has a minimum age limit of 21 years, and a maximum of 58 years. The income eligibility differs for different banks. When one would need to make use of these loans is pretty much self-explanatory. However, what many people fail to understand is that which type of bank they should go to, for a personal loan.
The dilemma between deciding the better lender among a public bank and a private bank is something a lot of people face. So here we have attempted to help you get out of this dilemma.
Given below is a list of factors you should consider before taking a personal loan from a bank, and then decide whether a private bank is a better lender or a public bank.
- Processing Fee – When you go to a bank demanding a personal loan, there is a lot of paperwork and verification in play, before your loan is sanctioned. The cost of getting the loan processed and all the paperwork gets done in time has to be borne by you. The private banks usually have a DSA (direct selling agent) who gets customers to the banks, public banks have nothing as such. This is one of the main reasons why the processing fee charged by private banks is higher, as they need to give these DSA’s a cut. However, this also ensures that your loan is processed quicker. In a public bank, you will have to wait longer to get the loan processed.
- Prepayment Issues – A lot of the times private banks charge you a certain amount of fees if you wish to prepay your loan, as this reduces the monthly rate of interest you would have to pay otherwise. Apart from this, there is also a stipulated time, before which you just cannot pre pay your loan. In the case of a public bank, none of these restrictions exist, you cannot only pre pay your loan a lot earlier than the scheduled time but can also avoid paying any prepayment charges.
- Approval Time – This is one of the major areas where private banks score way more than public banks. They might be charging you more, but are also quicker in their delivery. In a private bank, your loan would be approved much earlier than it would be in a public bank. So if you urgently need your loan to be sanctioned, which often happens in the case of medical loan, going to a private bank may be more helpful.
- Digitization and Responsiveness – This is again the area where private banks fare better than public banks. Although public banks are also catching up fast, private banks in most cases end up having not just better infrastructure, but also better technology. This can pretty much be witnessed even in the regular and day – to – day dealings of banks. Private Banks are typically more robust and responsive as compared to public banks.
- Overall Convenience and Experience – Since private banks operate in a more robust manner, due to their given targets, they can offer the customer a round the clock service. Unlike a public bank, where you will continuously have to keep on trying them to finally reach them on call. And even if you opt to go there personally, you would have to stand in long queues, which is something not everyone has the time for.
Conclusion – Deciding the better lender among public and private banks is certainly confusing, as both of them have their share of pros and cons. However, if you are clear with your needs and the amount of time you need the loan in, deciding the better lender becomes easier. If you are in no hurry and want to get the loan at a lower processing fee with no prepayment issues, you should opt for taking it from a public bank. Whereas, if you need it urgently and want a door to door service, then the private bank should be your pick.