Personal Loans are usually of two types i.e. secured personal loan which is secured against the mortgage of securities, high surrender value insurance policies, gold, etc and another is an unsecured personal loan which does not require you to mortgage anything.
These unsecured loans do not require you to provide any collateral security, though some PSU banks may insist on a third party guarantee. An unsecured personal loan can be taken to finance any short-term requirement like overseas trips, marriage, medical emergencies, etc. The only condition is that the personal loan should not be used for speculative purposes.
A personal loan is a simple hassle-free process of funding your personal requirement with minimal documentation and within quick time. Banks, as well as Non-Banking Financial Corporation (NBFC), finance personal loan in India
Personal Loan Purpose:
Personal Loan is commonly known as an all-purpose loan it can be used for fulfilling various legitimate personal needs that include:-
- Higher education for self, children, etc.
- Marriage in the family
- Dream vacation
- Festival expenses
- Medical emergencies
- Furnishing or renovation of a house
- Purchase of high-end consumer goods
- Purchasing of high-end lifestyle products.
Digital Personal loan
In this digital era, when everything is available online, even the financial lending sector is not leaving any stone unturned to lure their potential customers. They have tie-ups with top aggregate sites and come up with an attractive interest rate deals for potential borrowers. All you need is a sturdy internet connection and laptop, smartphone to compare quotes of top banks & NBFCs online and pick your ideal loan provider. The digital personal loan would enable customers to avail finance without stepping into the bank or NBFC branch and go through the tedious documentation procedure.
Customers will be able to apply for personal loans directly from the website of Apnaloan.com with the desired banks or NBFCs. On accepting the offer from the particular lender, the loan money gets credited to the customer’s bank account in 1-2 working days. With online facilities, you can compare quotes of top 35+ banks and Non-banking finance companies and pick the one that would best match your eligibility and requirements. These instant personal loans are slowly and steadily gaining an edge over the traditional loan patterns. They are the most preferred choice amongst the young salaried and self-employed individuals who often search for quick personal finance to meet their financial exigencies.
Personal Loan Eligibility Criteria:
Being unsecured in nature, lenders have stricter norms regarding eligibility and sanctioning of personal loans. But some of the basic eligibility criteria the applicant must fulfill are:
- Should be a Resident Indian
- Should be a minimum of 21 years of age
- Should be Salaried or Self Employed Professional /Non-professional
- Should be a permanent employee of the organization, if salaried
- Should have a continuous source of income to service the loan
Personal Loan Rates and Loan Amount:
The rate of interest is primarily dependent on:-
- Company for which the prospective borrower is working
- The credit history of the borrower.
The bank may reject the personal loan if the borrower has defaulted on his past dues on any credit card or loans.
The maximum loan amount is dependent on prospective borrower’s income and his or her ability to service the loan and can go up as high as Rs. 30 lakhs. The final loan amount is dependent on the host of other factors like regular fixed expenses, existing loan repayment, etc.
Personal Loan EMI and Repayment:
Most lenders will require the borrower to repay the loan within a period of 12 to 60 months maximum. The borrower can repay the loan by paying regular monthly installments also known as EMI or Equated Monthly Installments.
Personal Loan Fees and Charges:
Processing fees vary from lender to lender and will be in the range of 0.5% to 3% (excl. service tax) of the loan amount. Generally, the processing fee for the personal loan is not taken upfront but is deducted from the loan amount disbursed by the lender.
If the personal loan is availed on a floating rate of interest the borrower need not pay penalty for early closure of loan but may end up paying penalty if the loan is on a fixed rate of interest.
Personal Loan Documents Checklist:
To start the loan process, the lenders will require-
Application Form with photograph
KYC Documents –
- Proof of Identity – PAN / Passport / Driver’s License / Voter ID card / Aadhaar card, etc.) and
- Proof of Address – Passport / Aadhaar card / Landline Telephone Bill / Electricity Bill, Ration Card, etc.)
A/c. Statement –
- Statement of bank account for the last six months
- If any previous loan, then Loan A/c. Statement for last 1 year
For salaried individuals:
- Form 16 or IT returns – last 2 years
- Salary slips for last 3 months
- IT returns – last 2 / 3 years
- Audited Balance Sheet & Profit & Loss A/c – last 3 years
- Proof of turnover vide the latest sales/service tax returns
- Proof of continuity of business (Trade License /Establishment /Sales Tax certificate)
- Office address proof
- Qualification or registration proof required for Self-employed Professionals
Documentary proofs required may vary from customer to customer and the financial institute may ask for more documents if required.
Personal Loan Guarantor / Collaterals:
Nowadays, most lenders do not ask for any kind of guarantor or collateral, though some of the PSU banks may insist on some kind of third party guarantee.
Personal Loan Providers in India:
It is always advisable to first approach the bank where you have an account for a long time. It is easier to get unsecured loans from the bank where you have an existing relationship or salary account.
But also remember to get in touch with as many lenders as possible and get them to make personal loan offers to you. Once that is done, you can negotiate with the lender for the interest rate and select the most cost-effective option. You should also consider the processing fee and prepayment charges while finalizing the lender.
Some of the major players in the personal loan segment are HDFC Bank, Citibank, Standard Chartered Bank, Fullerton India, Bajaj Finserv, State Bank of India (SBI), etc.
Always remember that personal loans should be taken only in case of extreme urgency of funds. Being unsecured loans in nature, the personal loans are usually more expensive in terms of interest rate compare to any other loan taken against collateral security like gold jewelry, high surrender value insurance policies, etc.