Personal loan are utilized by the people who are in immediate financial need for any type of personal expense. The financial institutions namely the banks provide the personal loans. Information on application, process, pros and cons, interest rates of the personal loan are brought into light in the below article. Check this article to get to know the detailed information about personal loans.
What is a Personal Loan?With the rise in the cost of living of the people, the people are in need of financial help to meet their personal expenditures. Personal expenses which involve a high sum of the amount can be met only with a help of personal loans provided by the financial institutions. Banks help their customers by providing personal loans at a certain rate of interest and processing fees. This personal loan is given with an agreement of repayment to be done within a specified tenure. The time period may vary for each personal loan from 1 to 5 years. Mostly personal loans are provided for short and medium term financial requirements. All banks and financial institutions provide personal loans at attractive interest rates. Some banks keep the processing charges at bay to attract many customers. Personal loans are sometimes a boon to the people for any emergency needs like hospitalisation of any family member. The processing period of the personal loan is also less and the personal loans are sanctioned with minimal procedures.
The interest rate of the personal loan varies from bank to bank. Most of the banks charge 10.75% onwards for the personal loan amount. The interest rates also changes based on the loan amount, loan repayment period and the income of the applicant. Age of the applicant is also considered when the personal loan interest rates are decided. The personal loans interest rates for different types of personal loans are given in the below table.
What are the Interest Rates of Different Personal Loan?
Types of personal loan
Home improvement loan
Same day loans, loans for unemployed
Very high interest rate
There are many types of personal loans provided by the financial institutions depending upon the needs of the people. Some banks provides different personal loan schemes that can be altered to the convenience of the people. The personal loan helps people to meet immediate financial requirements and the rate of interest varies from bank to bank. Some of the personal loans provided to the people are as follows.
What are the Types of Personal Loan?
- Medical loan
- Home improvement loan
- Corporate loan
- Small business loans for woman
- Govt. Loans for small scale business
- Business startup loan
- Loans for unemployed
- Personal loan for low Cibil Score
- Marriage loan
The personal loans can be availed for almost any kind of expenditure. One has to consider certain things before applying for the personal loan. The loan amount and repayment duration must be taken into consideration as this is the primary step. The applicant must search for the correct bank at which he/she fits in the eligibility criteria of the bank. Before applying for the personal loan, calculate the EMI using the EMI Calculators available online for different banks. EMI Calculations helps to pre-plan the monthly expenses and need not suffer at the time of repayment of the personal loan. The processing time, interest rate and processing fees of the personal loan must be taken into account before applying for the personal loan. Re-check the proof document copies before submission to eliminate unnecessary rejection of personal loan. To be on the safer side, double check the details filled in the personal loan application form. The required documents are to be submitted with the application form are to be made ready for a successful sanction of the loan.
What are Important Aspects to Consider Before Applying for a Personal Loan?
One has to search for the interest rates and processing fees of different banks before considering for the personal loan. Once decided about the bank, the personal loan application form is to be obtained and duly filled. Fill in the details in block letters for easy understanding. Provide accurate information in the personal loan application form. Affix a photograph in the space given in the personal loan application form and sign it or provide thumb impression at the required places. The following documents are to be produced for applying for the personal loan along with the application form.
What are the Documents Required to Apply for a Personal Loan?
- Passport size photo of the applicant
- Identity Proof
- Proof of Age
- Address Proof
- Income Proof
- Aadhar card
- Voter ID
- Employer provided ID Card
- Ration card
- PAN Card
- Birth certificate
- SSLC certificate
- Aadhar card
- PAN Card
- Voter ID
- LIC Policy
- Ration card
- Aadhar card
- Ration card
- EB Bill
- Telephone bills
- Property documents
- Rental agreements
- Latest salary slips
- Form 16 and copy of ITR for last 2 years
- Employment certificate
- Last 3 months income statements
- Last 6 months bank statements
- Last 2 years IT Returns
There are eligibility criteria for availing the personal loan which slightly varies for different financial institutions. Different banks has a checklist to be fulfilled for obtaining a personal loan. To avoid rejection, check if you are eligible for a respective bank personal loan by providing details at the eligibility check calculator online. Also the limits of the personal loan vary for salaried people and self-employed people. To be eligible for obtaining a personal loan, one should fulfil the following list.
Who are Eligible to Apply for a Personal Loan?
- The applicant must be at least 21 years and the loan maturity time period must be within the applicant’s 58 years of age.
- The place of residence, type of house must be mentioned to estimate the stability of the applicant.
- The applicant must have stayed in the current residence for at least 3 years.
- The monthly net salary of the applicant, place of organization, experience, number of years in the present organization must be clearly specified as it is considered at the time of providing the loan.
Once the applicant submits all the required documents along with the application form, the processing and verification is done by the financial institutions. Once all the verification is done and if the application fits with all the eligibility criteria, then the personal loan is sanctioned. Otherwise, the personal loan is rejected. If the approval is given for the personal loan, the agreement must be signed and finally the loan is provided. The overall processing period differs between different banks. Mostly the personal loans are sanctioned maximum within a week. The banks and financial institutions charge a nominal fee for the processing of the personal loan. In some banks like Citi Bank and HDFC Bank provides same day loans for any emergency needs. In that case, the personal loan processing is done within minutes.
What are the Different Stages in Personal Loan Processing?
The applicant before applying for a personal loan must have an idea about the EMI that is to be paid every month for the loan amount. There are many online personal loan EMI calculator which helps to ascertain the amount which is to be paid monthly as EMI. The EMI calculation helps the applicant to decide if he/she can manage the monthly financial requirements. Follow the below instructions to calculate the personal loan EMI.
How to Calculate the Personal Loan EMI using EMI Calculator?
- Search for the bank’s official website in which you are planning to approach for personal loan.
- Choose the EMI Calculator from menu.
- Enter the loan amount, loan tenure and interest rate.
- Choose “Calculate EMI” to know the approximate figure of the EMI amount.
- The EMI amount is displayed within few seconds.
People are benefited to a certain limit through the personal loans. Personal loans help the people to meet their financial needs. Personal loans which has minimal procedures saves majority of the people who are in financial crisis. Some of the benefits of the personal loan are given as follows:
What are the Merits of the Personal Loan?
- The personal loan helps the people to achieve their dreams of buying a property, construct a house, plan for a vacation, etc.
- The loan amount is easily sanctioned if the person fits to the criteria fixed by the bank.
- The processing is also done quickly by the financial institutions.
- Some banks do not ask any collateral security for sanctioning the loan amount.
- The repayment of loan amount are flexible in certain banks which helps the applicant.
Though the procuring of personal loans has various benefits, it has its own limitations. Sometimes people are pushed to many problems when they are unable to repay the personal loan amount. The easy procurement of personal loan though being a boon, sometimes it attracts people to obtain personal loans unnecessarily which leads to problems. Some of the demerits of obtaining a personal loan are as follows.
What the Demerits of the Personal Loan?
- The interest rate for the personal loan is very extremely high.
- The processing fees charged for the personal loan is high.
- In case of failure of repayment of personal loan, the financial institutions take strict steps to get back the loan amount.
Any individual who runs a business or salaried people can apply for a personal loan. Even unemployed person can apply for a personal loan, but banks would sanction it only with some mortgage as security. Also the personal loan for unemployed people charges high rate of interest. One can get a personal loan if he/she can repay it in a specified period of time. Some banks provide personal loans even for NRI. People who already have taken other loans can also apply for a personal loan but should have a high credibility of repaying the personal loan. Applicant should be minimum 21 years to apply for a personal loan. To encourage women in the entrepreneurship world, the banks provide personal loans with low rate of interest for women to start up a business. One who is applying must have a good credit history in banks for obtaining a personal loan.
Who Can Apply for a Personal Loan?
There are lots of financial institutions that provide the personal loans for the people. Some of the banks or financial institution provides only certain kinds of personal loans.Also the interest rates of personal loans vary for different banks. ICICI Bank, Small Industries Development Bank of India (SIDBI) and India Finance Corporation Of India (IFCI), Kotak Mahindra, TATA Capital, Standard Chartered, Bank of Baroda, Oriental Bank, etc. provide business start up loans. Citibank and HDFC Bank provide same day loans. Government provides loans for small scale business at lower rate of interest. There are various other banks and other financial institutions which sanction many other kinds of personal loans. Most of the banks which provides the personal loans also provide 24/7 hours customer care assistance to help their customers. Some banks even eliminate extra charges like the pre-closure and foreclosure charges for encouraging the customer to repay the personal loan on time.
Who Provides the Personal Loan?
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