Taking a personal loan requires time and consideration. You need to be certain about the reason behind your loan and how and when you will be paying it off. Therefore, finding the right loan can be challenging as you have to think about fees involved, eligibility, terms and much more.
So when comparing Personal loans consider a few key things starting with the repayment period. The more time you take to pay off your loan, the more interest you will be paying to the bank. Another factor to look at is upfront fees charged by the banks for facilitating the loan.
Other charges can be in the form of missed payments or early settlement fees. In Saudi Arabia, early settlement fees can cost you a lot as each bank varies on their requirements. Some banks require you to pay 35% of the remaining profit if you decide to pay off your loan early. While other banks will require you to pay 100% of the outstanding profit amount due for the full finance period. Therefore it is wise to check the early settlement fee of each bank as it can also depend on your loan amount.
Loan amount of SR 50,000 to 100,000
Start with comparing all the loans available in the market. For lower loan amounts look at:
- Loans with low or no early settlement fees. Some banks may be reluctant to lend smaller amounts as they get less profit from interest payments, unless you spread the payments over a longer period of time such as 48 to 60 months. Remember this would mean you are increasing the cost of a small loan.
- A possible solution would be to get a credit card with a high borrowing limit especially if you can pay off your loan quickly. Even though the interest rate may be higher, it may be simpler to do so considering you can pay off the loan in a couple of months. However, if you are taking a loan for a specific reason, you can look into specially designed loans. For example the alinma bank Education Financing offers a maximum loan amount of SR 60,000, with no early settlement or upfront fees.
Loan amount of SR 100,000 to 500,000
Since this is a higher loan amount, getting a credit card may not be an option as your card limit might not be as high. For such loans look for:
- Loans with shorter tenures and low rates bases on your income. Usually longer loans with fixed borrowing periods are ideal for those who know how much money will be leaving their account each month.
- Factor in the upfront fees as well. In Saudi Arabia, the fees differ from bank to bank but are typically ranging from SR 1500 to SR 2000 for such loan amounts.
Loan amount of SR 500,000 and above
When looking for loans which can go into the millions, you have to be even more careful about selecting the right bank. For such loans consider:
- The early settlement fee in Saudi Arabia. As mentioned above, each bank has a different requirement for early settlement fees. A few banks will want 100% of the outstanding profit due. As a result, you can be stuck with paying bank profit, regardless of your ability to pay off the loan in a shorter time span. This can be a large amount considering the size of the loans. Other banks may calculate the fee based on the number of years left therefore will only give you the amount at the time of settlement. In such instances, be careful as there is a certain level of risk involved.