Buying a dream house or financing a huge wedding are some milestones for many people. You need secure funds to back up these dreams. Saving money from your monthly income to fund these events might be a good idea, but it is not feasible for everyone. Instead, a personal loan will help you meet your financial requirements.
Many institutions provide personal loans at affordable interest rates with highly flexible loan tenures and convenient payment options. Many banking and non-banking financial institutions (NBFCs) provide personal loans. Thus, making a choice is difficult.
This article will help you navigate the waters. The article highlights everything you need to know about personal loans.
What are personal loans?
A personal loan is a financial aid you can apply for meet your requirements. With a personal loan, you can buy a house or car or even make a down payment for a new home. You can use the loan for any expenses. The lender charges interest on the loan, and you have to repay the loan within a specific period. You can pay the amount in equated monthly instalments (EMIs).
Personal loans are unsecured loans. You do not have to pledge your property or other assets to get the loan. Therefore, anyone can apply for a personal loan. You will only be asked for collateral if your score is too low or the lender believes you cannot repay the loan.
You can apply for these loans online and offline. Both options have similar processing times and fees. Therefore, you can apply for the loan based on your convenience. Furthermore, personal loans can be approved swiftly. Personal loan applications can be approved within 2-5 days.
What are the benefits of a personal loan, and why should you apply for it?
There are several benefits of a personal loan. Some of these benefits are as follows:
They have an appealing interest rate.
Most banks and NBFCs charge an interest rate on a personal loan. Most lending institutions charge an interest rate of about 10.45 to 24% per annum. The interest rates vary from one lending institution to other. These also change based on your profile. Your credit history, income and the desired loan amount will affect the internet rate.
Minimum documentation is required.
Very little documentation is required for a personal loan. You submit proof of address, identity and income when applying for a personal loan. You can submit a copy of your PAN card, Aaadhar card, driver’s licence, ration card, etc. for proof of address and identity. However, these have to be two separate documents. You can submit salary slips and income tax return certificates as proof of income.
You get pocket-friendly EMI options.
Banks and other lending institutions aim to provide convenient EMI options to borrowers. The EMI you get will depend on your income and the tenure of the loan. You can negotiate the EMI options based on your financial capacity.
They have flexible tenures.
Loan tenure is a necessary factor to consider when applying for a personal loan. Many lending institutions provide flexible tenures, and you can decide the tenure of your loan based on your monthly income. Most lenders give you a tenure of about 12-84 months. You are expected to repay the principal and interest amount during this period.
There are prepayment or foreclosure charges.
Most people have the same mindset when applying for a personal loan: pay it off as soon as possible. However, this may not always be possible. Many lending institutions charge a penalty for prepaying your loan. This can be a flat rate. However, lenders will charge 2-5% of the outstanding amount. Therefore, you have to consider whether this rate is affordable.
The loan amount depends on creditworthiness.
Lenders examine your credit score, credit history, and income to ensure you can repay the loan. Therefore, if your creditworthiness is high, you are much more likely to be eligible for higher loan amounts. Therefore, maintain a good credit history before applying for a personal loan.
What are the minimum eligibility criteria to get a personal loan in India?
Most personal loans in India have the same eligibility criteria. You can check your eligibility for a personal loan using the following list.
- You must be between 21 and 60 years to get a personal loan.
- You must be an Indian citizen or a non-resident Indian (NRI).
- Your minimum income must be at least INR 15,000 to apply for a personal loan.
- You should have a minimum work experience of six months at your current employer to get a personal loan. Those working in government institutions, private-sector companies, MNCs or related companies, partnership firms, etc. can apply.
- Self-employed applicants should have business experience at the current business for a minimum of two years.
How to apply for a personal loan in India in online mode?
The application process for a personal loan can be completed online. Fill in a form and include details like your name, loan amount, e-mail address, mobile number, etc.
You also have to provide documents like your Income proof, address proof, identity proof, etc. Once you have filled in the details and uploaded the necessary documents, you can submit your application. The application will be reviewed by the lender, who will make a decision. The principal amount will then be transferred to your account.
A personal loan can cover all financial emergencies. You can use the funds for any expenses, such as education fees and electronic purchases. Personal loans are an ideal solution if you want quick access to funds. Personal loans also come with affordable EMIs, flexible tenures and low additional charges.