Personal Loan

Personal Loan

  • What is Personal Loan ?

Personal Loan is a kind of Loan taken by an individual to fulfill any of their personal unplanned needs / emergencies. This can be availed by

  • Professional Salaried Person(Salary getting credited to Bank Account)
  • Professional Self Employed like Doctors, Architects, CA etc
  • Non Professionals Self Employed who runs a Business (Like Trader, Manufacturer etc)

Personal loan is an unsecured loan means that there’s no document needed to mortgaged and this loan is given to the personal guarantee of the person.

As there’s no collateral of any asset like Home, Car loan, the personal loans carry higher interest rates than any secured loans like Home Loan, Loan against property or Car Loan. This is often because of higher risk carried by the Bank in granting them. Personal loan interest rates generally vary from around 11% up-to 33% depending on the Loan amount, Credit Score, Type of company and other factors as mentioned above.

Lenders on their discretion may offer lower interest rates for

  1. Government Workers
  2. Employees of some Private Limited Companies  as per their bench marking
  3. Own Bank Account Holders

The process for taking personal loan is faster and once the required docs and application is submitted, it goes through verification and underwriting process to check the credit worthiness of the receiver. This could mean whether loan can be sanctioned or not and if it is sanctioned, it decides the loan amount and the interest rate at which loan would be granted. Post this disbursal of the loan amount happens. This process can be instant or take up-to a week depending upon the Bank/NBFC and credit worthiness of the borrower.

Features of Personal loan:

  1. As personal loan is an unsecured loan, it doesn’t need any collateral or guarantee
  2. Personal loan is a short tenure loan. Most of the bank offer personal loan tenure for minimum 1 year to 5 years maximum.
  3. Personal loans usually have fixed interest rates.
  4. Any person can take personal loan anywhere from 20,000 to 20 lakhs depends upon his previous credit history.
  5. If you would like to take a personal loan then you have to submit some papers like proof of identity, residence, income tax returns of last 2 yearsAfter all the documents verification, the bank check the borrower’s CIBIL score.

Benefits (Advantages) of Personal Loan:

  1. Fast – It is one of the fastest Loan than other loans. one can get as processing time for Personal loan is generally less compared to other types of loans.
  2. Document needed for the person loan is very few in number.
  3. No Collateral – As it is an unsecured loan, there is no collateral (like Home, Car etc) needed.
  4. Build Credit History – Consistent timely repayment of Personal Loan can build a good or decent Credit Score.
  5. Any Purpose – Personal Loan can be availed for any purpose like Wedding, Travel, Medical Emergency, education of the child etc. This is not like Car Loan or Home Loan which can be used for buying Car or Home only respectively.

Eligibility Criteria For Personal Loan:

  • Must be Indian Citizen.
  • Company type individual works for
  • Occupation
  • Age
  • Salary
  • Individual’s location like Metro/Non Metro
  • Defaults or Credit Settlements, if any
  • Repayment capacity after deducting any existing EMIs

Simple documents needed for the personal loan application and the process of personal loan is also very easy. All you need is the documents to support your eligibility:

  • Filled application form for personal loan
  • Passport size photo
  • Valid Proof of age (birth certificate/ School or collage mark sheets/ passport/ voter’s ID/ driving license/ PAN card/ Aadhar card)
  • valid identity proof (passport/ voter’s ID/ driving license/ PAN card/ Aadhar card)
  • valid address proof (latest utility bill/ ration card/passport)
  • Document for salaried person – last 3 months salary slip, bank statement of last 6 months and current year form 16 & offer letter of the current company. But if you are a self-employed person then you have to submit tax report, profit & loss, balance sheet of last 2 year, business proof and bank statement of last 6 months.
  • Proof of continuity of business for self employed

Personal loan means a loan that may be taken for personal expenses. Best part of personal loan is that you don’t need to disclose the reason of taking personal loan. Personal can be used for following purpose –

  • Travel expenses

  • Medical grounds

  • Wedding expenses

  • Educational Expenses

  • Renovation of houses

 
Following are the sub categories for which you may apply for personal loan:
  • Loan for Supporting Weddings:
    You may take a personal loan to support you own wedding. In India it is very prominent reason for taking personal loan as the “big, fat Indian wedding culture’ is known to all the financial institutes. They’ll offer you wedding loan begin from buying the jewelry to support the marriage events.
  • Home Renovation Loans:
    Bank even provide personal loan for the renovation of the home. It is a tailor made loan as per your needs.
  • Vacation/Travel Loans:
    Holidaying is becoming expensive by the day. As new horizons beckon, the wanderlust in you would love to go places. Hence, Travel person loan are in the maximum portfolio of lenders.
  • Debt Merging Loans or Debt Consolidation Loans:
  • It is an type of loan where you can merge all your liabilities under one umbrella. It help you to manage all liabilities easily. Instead of many EMIs, you pay just one. In new personal loan you can get cheaper interest rate.
  • Loan for Higher Education:
    In India, education is costly and not easily available for everyone. Therefore, education loan is important. Almost all the banks offer education loan in India

Before taking personal loan it is very necessary to check that you will be able to pay your EMI on time or not. All the transactions that you make gets tracked with the help of CIBIL Score. So, make sure to go ahead with the loan amount which can be repaid every month without delays as the failure of monthly EMI payment will affect your CIBIL score badly. Before Deciding the loan amount its very important to check the repayment ability. The EMI of your loan must not be more than 30 to 40% because there must be many other expense to meet up every month. You don’t need any loan If you don’t have many expenses to meet every month. It you having already a loan ongoing try to marge the existing loan with the unrest loan to make your future life healthy. Keep the loan repayment date every month in mind to plan the expenses as per that.

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Business owner
Salaried

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Personal Loan

  • What is Personal Loan ?

Personal Loan is a type of Loan taken by an individual to meet any of their personal unplanned needs / emergencies. This can be availed by

  • Salaried Professionals (Salary getting credited to Bank Account)
  • Self Employed Professionals like Doctors, Architects, CA etc
  • Self Employed Non Professionals who runs a Business (Like Trader, Manufacturer etc)

It is unsecured loan meaning there is no collateral being mortgaged by the bank and is given on the personal guarantee of the individual.

As there is no collateral of any asset like Home, Car done, the personal loans carry higher interest rates than say secured loans like Home Loan, Loan against property or Car Loan. This is due to higher risk carried by the Bank in granting them. Personal loan interest rates generally vary from around 11% up-to 33% depending on the Loan amount, Credit Score, Type of company and other factors as mentioned above.

Lenders on their discretion may offer lower interest rates for

  1. Govt Employees
  2. Few Pvt Ltd companies’ employees as per their benchmarking
  3. Own Bank Account Holders

 

 

The process for taking personal loan is quicker and once the required docs and application is submitted, it goes through verification and underwriting process to check the credit worthiness of the borrower. This could mean whether loan can be sanctioned or not and if it is sanctioned, it decides the loan amount and the interest rate at which loan would be granted. Post this disbursal of the loan amount happens. This process can be instant or take up-to a week depending upon the Bank/NBFC and credit worthiness of the borrower.

Features of Personal loan:

  1. Personal loans are unsecured loans i.e the loan doesn’t require you to use an asset as collateral or guarantee.
  2. Personal loan is a short tenure loan. Most of the banks provide you loan for maximum 3 years (36 months) to max 5 years (60 months).
  3. Personal loans usually have fixed interest rates.
  4. The amount of personal loans ranges anywhere from Rs. 20000 to Rs. 20 Lakhs and depends on person’s credit rating. (Ability to pay)
  5. Documents required to get a personal loan are proof of identity, residence, income proof / Income Tax Returns of last 2 years. After verification of the documents the borrower’s credit score is checked with Credit Information Bureau (India) limited commonly known as CIBIL.

Benefits (Advantages) of Personal Loan:

  1. Quick – It is one of the quickest Loan than one can get as processing time for Personal loan is generally less compared to other types of loans.
  2. Minimum Documents – Minimum documents are required for availing of Personal Loan.
  3. No Collateral – As it is an unsecured loan, there is no collateral (like Home, Car etc) required.
  4. Build Credit History – Consistent timely repayment of Personal Loan can build a good Credit Score.
  5. Any Purpose – Personal Loan can be availed for any purpose like Wedding, Travel, Medical Emergency, education of the child etc. This is not like Car Loan or Home Loan which can be used for buying Car or Home only respectively.

 

Eligibility Criteria For Personal Loan:

  • Should Have Indian Citizenship.
  • Type of company individual works for
  • Occupation
  • Age
  • Salary
  • Location of the individual like Metro/Non Metro
  • Any defaults or Credit Settlements
  • Repayment capacity post deducting any existing EMIs

 

The documents required are very simple when it comes to personal loan application. The list of required documents is very prescience & the process for personal loan is very simple & easy. All you need is the documents to support your eligibility:

  • Filled application form for personal loan
  • Passport size photo
  • Valid Proof of age (birth certificate/ School or collage mark sheets/ passport/ voter’s ID/ driving license/ PAN card/ Aadhar card)
  • valid identity proof (passport/ voter’s ID/ driving license/ PAN card/ Aadhar card)
  • valid address proof (latest utility bill/ ration card/passport)
  • Documents of income: Salary slip of last 3 months, 6 months bank statement, form 16 of current year & the offer letter of current employer in case of salaried person. In case of self-employed income tax return & profit & loss & balance sheet of last 2 years, last 6 months bank statement & business proof.
  • Proof of continuity of business for self employed

Since the name itself is personal loan it may be taken for variety of personal reasons. The best part is you do not have to disclose the reason for taking the loan even to the bank or financial institution as it is a personal loan. There are plenty of purposes for which a personal loan can be a good idea. For example for travel plans, for wedding, to support medical emergencies, for education, to renovate your house etc.

Following are the sub categories for which you may apply for personal loan:

  • Loan for Supporting Weddings:
    You may take a personal loan to support you own wedding. In India it is very prominent reason for taking personal loan as the “big, fat Indian wedding culture’ is known to all the financial institutes. They will offer you wedding loan start from buying the jewelry to support the wedding events.
  • Home Renovation Loans:
    Banks does provide personal loan even for renovation of the home. These loan are tailor made as per your requirements.
  • Vacation/Travel Loans:
    Holidaying is becoming expensive by the day. As new horizons beckon, the wanderlust in you would love to go places.
  • Personal Loans for travel are now part of the portfolio of most lenders.
  • Debt Merging Loans or Debt Consolidation Loans:
    A debt merging loan helps you to syndicate many different liabilities under one umbrella. Merging makes it easier for you to manage your liabilities. Instead of many EMIs, you pay just one. Besides, you can gain cheap interest rates as well.
  • Loan for Higher Education:
    Education is costly and not easily available to everyone. Therefore, education loans are very important. Almost all banks in India offer education loans and the demand has remained steady.

Instead of going ahead & taking personal loan for your need it is most important for you to check if you would be in a position to repay the personal loan through monthly EMIs or not. Now a days every financial transaction that you make can be track thanks to CIBIL score. So, make sure to go ahead with the loan amount which can be repaid every month without delays as the failure of monthly EMI payment will affect your CIBIL score badly. It is very important for you to check the ability of repayment before deciding the loan amount. The EMI of your loan must not be more than 30 to 40% because there must be many other expense to meet up every month. And if you do not have many expenses to meet every month you will surely not be in need of personal loan! If you already have an ongoing loan (S) than try to accompany your existing loans with your future loan because this will ease your life a lot. Do not forget to keep the loan repayment duration in mind as you will have to plan the expenses as per that.

Instant Loan Approval

Business owner
Salaried

Quick Links

Cards

Investments