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Personal Loan in India

IndianMoney.com Research Team | Updated On Tuesday, December 11,2018, 03:28 PM

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Personal Loan in India

 

 

What is Personal Loan?

A personal loan is a short term unsecured loan that is availed by individuals to meet financial needs during an emergency, or to meet personal or educational goals. These loans are given to individuals based on the credit history and ability to repay the loan. Repayment is usually through fixed installments over a fixed time period. The timeframe of those payments is determine

d by the specific terms of your loan. Banks are open to negotiation on interest rates if you have good credit score.

Want to know more on Personal Loans? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.

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Personal Loan in India

Features and Benefits of Personal Loan:

  • No Collateral Required: Personal loans are unsecured loans. To avail a personal loan, there’s no need to keep an asset as security.
  • Various uses: Personal loan can be used as per the requirement of the borrower without any pre-conditions. The money borrowed can be used for various reasons like an emergency medical situation, sudden travel plans or home renovation.
  • Flexible tenure: In this type of loan, the borrowers get a flexible tenure of up to 5 years to repay the amount borrowed.
  • Simple process of documentation: The documentation process of personal loan is simple. Minimum documents are required to apply for a personal loan and the loan is often approved within 48 hours of submitting the application.
  • Flexible quantum of loan: depending on the borrowers repayment history, banks offer personal loan for requirements as low as Rs 10,000 to as high as Rs 40 Lakhs.

See Also: Tax Benefit For Home Loan

Personal Loan Eligibility Criteria:

Personal loans are offered to both salaried professionals and self-employed. As personal loans are unsecured loans, there is a risk involved in these loans, as there are chances that the borrower might default on payments. The eligibility criteria might differ across banks, however, there are a few basic eligibility criteria that are common for most banks. The eligibility criteria of a personal loan are given below:

  • Income: the applicant must have a stable source of income that shows the repayment capacity of the borrower.
  • Age: The applicant must fall within a certain age bracket that is specified by the bank.
  • Repayment capacity: The applicant must have job stability and must work in an organisation for a certain number of years or be involved in business for some years.
  • Credit score: the applicant must have a good credit score to apply for a personal loan.
  • Existing loans: Applicant must not have availed any other loans or must have strong ability to take additional debt.

Documents Required for Personal Loan:

The documents required to apply for a personal loan are listed below as per category:

Documents Required for Salaried Individual:

  • Current dated salary slip with form 16.
  • Bank statement of previous 3 months.
  • Passport size photographs.

Documents Required for Self Employed Individuals:

  • Proof of identity: Passport/Voter ID Card/Driving License/Aadhaar
  • Proof of residence: Passport/Voter ID Card/Driving License/Aadhaar/Leave and License Agreement/Utility Bill of not more than 3 months
  • Proof of income i.e. audited financials for the last 2 years
  • Proof of office address
  • Proof of ownership of business
  • Proof of continuity of business
  • Latest 6 months bank statement
  • passport size photographs

How to Calculate EMI on Personal Loan?

Before applying for a best personal loan in India , make sure you can repay the amount. Use the EMI calculator to get a clear idea on how the monthly EMIs on personal loan are calculated or what the monthly EMI would be on the money borrowed. The EMI calculator helps ensure that monthly loan installments come within your budget.

To use the EMI calculator, enter details like amount, interest rate on personal loan in india

 

and tenure in specified boxes. Click on Calculate. The calculator will show you the amount needed to pay monthly installments.

Do's and Don’ts of a Personal Loan:

Do’s:

  • Pay your loan installment fully each month.
  • Borrow what you can repay.
  • Know credit score before applying for cheapest personal loan in india
     
    personal loans.
  • Compare different personal loan offers to get the best deal.
  • Read the fine print carefully.

Don’ts:

  • Submitting multiple applications with different banks to get a personal loan.
  • Missing the due date of loan installment.
  • Signing the loan-related documents without properly understanding the terms and conditions.
  • Borrowing more than repayment capacity.

See Also: IndianMoney Review: How To Manage Debt?

How to Avoid Personal Loan Rejection?

Personal loans are sanctioned based on the repayment capacity and the credit score of the borrower. Given below are a few points that can be followed to avoid personal loan rejection:

  • Pay your credit card bills and loan installments on time.
  • Avoid applying for multiple loans at one time.
  • Keep your credit utilization ratio below 40%.
  • Make sure you fulfil the lender’s eligibility criteria.
  • Make sure you have a credit score above 750.

FAQ

Is there prepayment penalty on personal loan?

Yes, there are pre-payment penalty charges that you must pay for early closure of the loan.  Most banks and NBFCs charge a prepayment penalty of 1-3% on the outstanding amount of a personal loan.

How can I bargain for better rates on Personal loan?

  • If you have a good credit score, you can ask the bank for lower interest rate on the personal loan in India.
  • If you have a good history of paying loan dues on time, then it can help you get a better interest rate than others.

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IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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