In this article, we will discuss all the aspects of a Personal Loan such as Eligibility, Interest Rate, Documents, loan providers, fees, etc. Personal loans comes in picture when you are in urgent need of money for a domestic purpose or eventualities. However, you need to pay a little higher rate of interest rates on these loans compared to other secured loans.
What is Personal Loan?
A personal loan as the term itself explains a loan taken from the bank purely for personal reasons. It could be for a wedding, vacation, to conduct some other functions, medical emergencies, or any other personal/domestic and similar reasons. This is the only unsecured loan that is provided to the public by the banks unlike a home loan, car loan & auto loan and charged with higher interest rates compare to other loans.
These days for many peoples it is difficult to raise a big amount suddenly either because they don’t have sufficient cash or because they’ve blocked their money in some investments or fixed assets. So here, Personal loan comes as a relief for all those who need immediate cash.
Must know aspects of Personal Loan
A personal loan is a money that one can borrow for a variety of reasons. As in , the personal loan could be used to pay off debts with high rate of interest, make home renovations, or plan your dream marriage ceremony. Personal loans can be obtained from a bank, a financial institution, a credit union, or an online lender. Borrowed funds must be repaid over time in terms of EMI, usually with interest. Personal loans may also be subject to processing fees levied by some banks and institutions. Important takeaways about personal loans are as follows:
- These lendings can be used for multiple personal expenditure.
- It is possible to apply for it at banks, credit card companies, and digital moneylenders.
- It can be borrowed in exchange for an insurance policy in order to get loan.
- Rates of interest, service charges, credit limits, and interest payments vary greatly among these loans.
Reasons for choosing a Personal Loan
These could be used to pay for:
- Costs of relocation
- Consolidation of debt
- Medical expenses
- Wedding costs
- Renovating or repairing your home
- Funeral expenses
- Vacation expenses
- Unexpected costs
Personal Loan Eligibility
The Personal loan is like instant cash which one gets from the bank after evaluating the income & financial background of a person. The individual who takes a loan could be a salaried, businessman or any other person who is having a regular income source. The loan is disbursed to the eligible peoples those can repay the EMI. You can check your EMI with our Personal Loan EMI Calculator to make an estimate for the loan.
Apart from evaluating the income level then financial institutions and banks also consider other factors also like, the age of a person, he/she should be of a minimum age of 21 years. Even if both the criteria are satisfactory there is one more very important aspect which they check i.e. the CIBIL score for the person. CIBIL score is nothing but it is checking the creditworthiness for the last six months of a person where the information is collected from other banks with which the customer has dealt with. Once the information is collected then the CIBIL score (credit score) is calculated which generally ranges between 300-900, where 300 standing low and 900 being the highest. Anyone, who has a score above 750 will get the loan without any hassle.
Loan Providers
These days the competitions are so much that there so many banks that provide the loan at competitive interest rates. These loans are provided by public sector banks, private banks, financial institutions and non-banking financial institutions in India.
Documents
One needs a minimum and easily available documents for a personal loan application. These documents can be found with every individual who is employed. The documents that are required for a personal loan may include Identity Proof, Residence Proof, Salary Proof, Income Tax Return for recent years, etc. For a more detailed guide please read here – Required Documents for Personal Loan Application.
Interest Rate & Tenure
The interest rate of personal loans ranges from 10.50% to 37% and in general, the loan tenure is no longer than 5 to 6 years. The processing fee also may be charged by the banks but it differs from bank to bank. Interest Rates for Home loans may be less compare to Personal Loan interest rates.
| Loan Tenure | Interest Rate |
|---|---|
| 1 to 5 Years | 10.50% to 37% |
If you have needed a personal loan and you want to check your payable EMI and total payable interest to the bank. You can calculate the EMI using our Personal Loan EMI Calculator. You can also check it through the EMI calculator by filling in the loan amount, loan tenure & interest rate.
FAQs
A personal loan from them is usually approved within 48 hours, if not the same day. Subsequently, disbursed to the borrower’s bank account on the same day.
Certain banks provide Personal Loans ranging from Rs 50,000- Rs 15 00,000 with minimal documentation and quick approval. The total amount of personal loan that can granted to a personal depends on the credit score & salary of the borrower.