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.