Your Guide To Knowing Everything About Personal Loans
Facing financial difficulty and just barely floating above the poverty line or stuck in a vicious debt trap? Well, why Haven't you tried taking a personal loan yet? Are you reluctant to consider it as an option because you aren't fully aware of it and want to escape the endless hours of research that goes into getting to know fully about a personal loan?
Then you are at the right place and your search for a personal loan ends here! As we got you covered right from the start explaining in brief about personal loans to the best instant loan providers in the market.
So, stick with us till the end so that you don’t miss out on anything!
What are Personal Loans?
A Personal Loan is a hassle-free instant loan that you can avail of without securing it against an asset that is why it is also called an unsecured loan.
In a nutshell, it can be taken to meet your emergency cash needs, and it's a quick and convenient method by which a loan amount gets disbursed in your bank account within a few hours after examining your credit history and other documents.
Why go for a Personal Loan in the first place i.e the Choiceworthy benefits of a Personal Loan?
If You are in urgent need of a loan and want to avoid so much paperwork that traditional banks resort to, then a Personal Loan is your go-to option as it approves your loan with minimum documentation and that too is paperless.
Tired of running after government banks that will delay your loan issue as much as possible, then personal is the best option for you to get a direct bank account transferred in a few minutes!
No security and collateral is needed to secure it, so you don’t need to mortgage your house just to see your lovely daughter getting married.
You are no longer bound by fixed tenure as payment terms are flexible and you can repay it at your own slow and steady pace in EMI.
Claim tax benefits as you make your interest payments if you have used up the loan amount to renovate, construct or buy a house.
Wondering if you are eligible to secure a Personal Loan? Let’s find out!
Firstly, no matter if you are self-employed or a salaried individual as long as you have a stable income source, you will get it for sure.
The applicant must be of 21 years of age and cannot be older than 60 years.
Must have a decent CIBIL score in the range of 700 to 900+
Key criteria that are considered are income level, credit, employment history, and repayment capacity.
Those who earn a minimum income of 25k /month
Holding onto a job for a minimum of 2 years with a secure job with a current employer for at least 1 year.
Now, Finally, you have been issued your demanded loan amount, but Do you know for all purposes it can be used? if not then here you go!
Personal Loan is an all-purpose loan and can be used to fulfill each and every one of your needs! So whether you want to fast-track your happiness by going on your dream vacation or save your ailing mother and borrow money for her medical expenses, it does it all.
To make it easy to skim through we have compiled a list of all the uses for which you can go for personal Loans.
If having a financial crunch and empty pockets can’t back your increasing Higher education fees, then a personal loan is a great way to support it.
Weddings happen once in a lifetime and it is that magical moment that deserves investment, but if you have tight hands over cash, a personal loan will be your solution to fund it and make your day unforgettable and fun.
Wants to pack your bags and hit the road or take the plunge to go for globe-trotting but couldn't go that extra mile as you don’t have the cash to afford it, then the personal loan will rescue your vacation plans and let you go diving or snorkeling wherever you wish to.
Well, Personal Loans can meet many more of your needs, not to mention whatever you can think of so take your paper and pen to draft your urgent needs and forget about your expenses as a personal loan can sponsor them to the largest extent.
The point to be noted is don’t use the issued personal loan money mindlessly without any thought, so always strive to use it judiciously and carefully to not fall out in the consequences of a default personal loan.
How can you apply for a Personal Loan?
- Applying for a Personal Loan is quick and easy. It just takes 5 easy steps
- First thing first, figure out for what purpose you require a loan, and then how much of it will fulfill your requirement it can be 1 lakhs, 5 lakhs, or 10 lakhs depending on the use.
- Check the eligibility criteria and determine how much you can borrow
- Calculate your EMI using an EMI calculator that is available on each Bank, NBFC, or loan aggregator app.
- Now, either you can approach the bank that is nearest to you or go via Net Banking or through an ATM.
- Furnish the minimum number of documents that are being asked for, by the loan provider. All you really need are Address proof, Income proof, and Identity proof.
How do you repay the amount borrowed?
The repayment amount is set on the basis of your repayment capacity which is used to ascertain your EMI installments paid monthly. The amount to be paid is inclusive of the interest charged on the loan. Generally, a standing instruction is set against a person’s bank account and the monthly EMI is deducted on a specified date.
Additionally, customers can choose to repay the amount even before the loan tenure ends after examining if they don’t have to pay any extra fees if that is what they are going for. Most Banks require you to complete a total of 12 EMI installments before you proceed to submit the full loan amount prior to the loan tenure.
If you still want to repay the amount then Banks do charge a foreclosure charge in case it is being paid before the set tenure.
Most FAQs related to Personal Loans
What is the interest rate being charged on a Personal Loan?
- As the Personal Loan is an unsecured loan, unlike a Car loan and home loan, interest rates charged on this are generally on the higher side than those one backed by an asset. The rate of interest can range anywhere between 10% to 22% p.a. A number of factors such as the tenure of the loan, borrower's credit score, and repayment capacity influence to determine the interest rate of a personal loan.
What is a credit score, and how does it affect your loan approval?
- A credit score is a number from 300 to 850+ that marks a customer’s creditworthiness and plays a key role in a lender’s decision to offer credit. In India it is determined by CIBIL i.e why it is also called the CIBIL score.
- A score above 750+ is considered a good one and increases the chances of a loan being issued. In addition to that, the CIBIL report also contains comments about missed EMI payments, which are taken into consideration while reviewing the loan application. Summing that up, a higher CIBIL score makes the loan deal more likely in your favor.
What is the maximum loan tenure?
- It is generally set between 1 to 5 years by the borrower after taking into account other urgent financial obligations. You need to keep in mind that the interest rate is higher if you are choosing a longer tenure.
Lastly, Check out the 6 factors, you should keep a tab on, before applying for a Personal Loan.
- Maintain a good credit history, as it affects your credit score
- Check the all-in cost and make sure you read all T&Cs before applying for the loan
- Take a loan in sync with your capacity to repay.
- Ensure that your older credit cards don't get defaulted
- Choose the right loan product on the basis of your needs and take the loan only from a credible lender.
- Check for CIBIL Report for mistakes and rectify them
About to apply for the Loan? Read it first to get an idea about the best places to avail Personal Loans
I’m listing out the best tried and tested Personal Loan providers in the market that you can look for
- HDFC Bank Personal Loan- Its personal Loan product is highly affordable and has exclusive loan offers for women employees too.
- Bank Safari-It is a one-stop website and a loan aggregator app hosting all the major NBFCs such as Paysense, Navi and Home credit, etc., that provides loans within a few hours.
- Navi-The best customer-friendly loan-providing app in India where you can acquire a loan of up to 20,00,000
- Bandhan Bank Personal Loan-Its covers under its ambit not only salaried employees but freelancers and self-employed ones as well.
- SBI Quick Personal Loan- Offers without collateral easy-to-apply loans up to 20 lakhs
You can always download their apps and with minimal to no paperwork you are ready to avail of your Personal Loan hassle-free.
