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Is Personal Loan the Right Choice for You?

IndianMoney.com Research Team | Posted On Saturday, June 01,2019, 04:25 PM

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Is Personal Loan the Right Choice for You?

 

 

A personal loan is a short-term unsecured loan availed by individuals from banks and other financial institutions. A Personal loan can be an excellent option for Individuals looking for ways to fund various expenses. You can use the money borrowed for various purposes without any preconditions like funding a big ticket purchase, fulfil family obligations, pay off medical bills, pursue education or fund a vacation. Personal loans are sanctioned based on certain eligibility criteria like income, credit history, and employment history and repayment capacity of an individual. Since personal loans are unsecured loans, the rate of interest charged by the lender is high. Individuals wishing to avail a personal loan from the bank can either apply through their net banking apps or can visit the bank’s website to apply for a personal loan.

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Eligibility Criteria of a Personal Loan

The personal loan has some eligibility criteria that must be fulfilled by the applicant in order to secure a loan:

  • The applicant should be an Indian citizen.
  • At the time of applying for the loan, the applicant should be in the age group of 21-65 years
  • The preferred credit score of the applicant should be 750 and above.
  • The minimum monthly income of the borrower must be Rs. 20,000. The minimum income criteria are determined based on the city of residence of the applicant.
  • The applicant must have minimum work experience and must have a steady source of income. The self-employed professional requires work experience of 3 years and the salaried individuals must have a work experience of a minimum 1 year.
  • The applicants must not have debt or loan liabilities while availing a personal loan. If so, then the applicant must have a good income to repay additional liabilities.

You can also visit online and check your personal loan eligibility before applying for the loan

See Also: Personal Loan In Bangalore

Documents Required for a Personal Loan

Listed below are some of the common documents that must be submitted by the applicant along with personal loan application. The bank may ask for additional documents, if necessary:

  • Duly filled and signed the personal loan application
  • 2 passport sized photographs
  • Proof of identity: PAN card, Aadhaar card, Voter ID card
  • Proof of address: utility bill, driving license
  • Proof of age: birth certificate, passport
  • Proof of income: salary slip of the applicant, last 2 years balance sheet, IT returns statement
  • Bank account statement of the previous 3 months.

See Also: Types of Personal Loans

Benefits of a Personal Loan

Flexible Tenure: personal loans offer flexibility in the repayment tenure. You can either opt to pay off your loan within short-term by paying 36 instalments or can opt for a long-term 60 months repayment schedule. The principal amount coupled with the interest amount will be divided in the monthly EMIs. The interest on personal loan also depends on the tenure of the loan.

Prepayment Option: banks generally offer prepayment option on personal loans. You do not have to pay any pre-payment charges for closing your personal loan early. Also, you can save on a lot of interest payment.

No Collateral Required: personal loans are unsecured loans, so it does not require the borrower to provide any collateral to avail the loan. The loan is sanctioned based on the creditworthiness of the borrower and his repayment capacity.

Various Uses: personal loans can be availed for any purpose like for funding marriage, for fulfilling family obligations, to meet emergency medical expenditures or to fund education or business. The money borrowed can be put to various uses and the borrower need not specify the purpose of borrowing to the lender.

Simple Documentation Process: applying for a personal loan is a very simple process that requires minimal documentation. You can apply for a personal loan online by logging in to your net banking app or through an online personal loan aggregator. In the online process, you have to upload the documents. Often the loan is processed and approved with 48 hours.

Flexible Quantum of Loan: since personal loans are availed for various reasons, therefore a borrower can avail a personal loan ranging from Rs. 10,000 to Rs. 40 lakh. The amount of loan sanctioned depends upon the income of the borrower and his repayment capacity.

See Also: Is Personal Loan the Right Choice for You?

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