- Compare the total amount you will repay, not only the monthly EMI or the headline rate.
- Ask for the Key Fact Statement: it shows the annual percentage rate (APR) and all charges.
- Apply to a few lenders through a marketplace instead of sending many separate applications.
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Interest rate and type
Check whether it is reducing or flat. A flat rate looks lower but costs far more: see the difference.
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Processing fee
Usually a percentage of the loan plus GST. On a ₹5 lakh loan, a 2% fee is ₹10,000 before GST.
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APR (annual percentage rate)
This folds interest and fees into one yearly figure, so offers can be compared fairly. RBI requires lenders to share a Key Fact Statement for retail loans, which includes the APR.
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Tenure and EMI
A long tenure gives a low EMI but a high total interest. Check with the EMI calculator.
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Prepayment and foreclosure charges
If you may repay early, a loan with no or low charges is worth more. See foreclosure vs part-prepayment.
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Insurance and add-ons
Ask whether insurance is optional. Bundled premiums raise the real cost of the loan.
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Disbursal speed and documents
Faster is not always better: ensure the terms are clear before you accept.
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Lender reputation and grievance process
Choose a regulated bank or NBFC with a clear complaint process. See how to avoid fake loan apps.
A simple method
Shortlist two or three offers, then put them in one table: EMI, processing fee, total interest, total repayment, prepayment charge. The offer with the lowest total repayment for the tenure you can afford is usually the best. Start with personal loan offers on CibilBazaar or check your eligibility first.
This article is for general information only and is not financial, legal or tax advice. Interest rates, fees and rules change, so confirm current terms with the lender or the regulator before you decide. Examples use illustrative figures. Last reviewed: October 2026.
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