There are a number of reasons to opt for personal loan. They are listed as follows:-
- Meet any medical emergency.
- Purchase a house or car.
- Renovation of house.
- To meet the requirement of child’s education.
- Repay any previous loan.
- To meet any heavy expenses like- family vacation.
- To buy any expensive commodity or gadget.
- For starting a new business venture.
- To enhance the prevailing business.
Important Points before engaging into a Personal Loan:-
- To check for Credit score or CIBIL score.
- To do a thorough market survey on personal loan options like interest rates, charges levied on pre-payment charges and other terms and conditions.
- Plan for the needed expenditure and opt for the personal loan.
- Considering the period of repayment which can be between 1-5 years.
- To have a detailed information about APR(Annual Percentage Rate).
- Look for a low-cost processing fees, penalty for pre-payment option, lower payment delivery charges.
- To investigate the risk involved for failure of loan repayment.
- Need to compare the customized personal loan quotes from different banks offering personal loans.
- To check whether the banks are offering flat interest rate basis or reducing balance basis.
- Before signing as the guarantor, one should be fully aware of the terms and conditions of personal loan guarantor.
Features Of Personal Loan
- Loan is offered without any collateral, so the interest rate is tend to be high.
- Interest Rate is different for different customer’s depending on the salary, loan amount, loan tenure, repayment capacity and other criteria.
- It requires minimum paper work and is often approved within 48 hours of submission of the application.
- Additional fees such as late payment penalties, charges on documentation etc.
Types Of Personal Loan
- Loan for Business Start up
- Loan on same day.
- Small business loans for women
- Loans for unemployed.
- Loans for small-scale business.
- Loan for medical emergency.
- Loans for marriage purposes.
- Loan for corporate sector.
Criteria For Being Eligible For Personal Loan
Income – Should have a regular income source for a salaried individual, self-employed business individual or any kind of professional.
Age – Must be with in the norms of the lending institution.
Repayment – Should possess capability to repay the loan amount.
Credit Score – Should have a good credit history.
EMI– Should not have a burden of any existing loan liability.
Documents To Applying For Personal Loan
- Identity Proof
- Address Proof (Electricity bill, Telephone bill)
- Age Proof
- Income Certificate(salary slip for salaried individual/recent acknowledged ITR copy of self-employed individual)
- Certified license copies for self-employed people.
Personal Loan Interest Rates
Interest Rate – 10.75% onwards
Loan Amount – Rs. 1 lakh-Rs. 30 lakhs
Loan Tenure -1 year – 5 years
Processing Fees – Depends on the banks
Pre-closure Charges – 0-4% of principal outstanding loan amount
Today a growing no. of individuals is opting for Personal Loans because of its easy availability, least complication of paper work and no requirement of assets.