In the market for a Personal Loan? Here’s everything you will need to set things in order.
Personal Loans are the talk of the town. Blame it on the hassle-free application process or the flexible terms and conditions, millennials are making a queue to grab a share of this massively popular loan type.
What Makes Personal Loans So Popular?
Reason No 1: It’s readily available online – Of all the things millennials hate, visiting a bank is probably at the top of the list. Banks are boring, time-consuming, and more often than not, frustrating. With Personal Loans now being offered online, it takes a little less than 5 minutes to get a loan approved. Just fill out a couple of forms and you are all set. Now, who can beat that!
Reason No 2: It’s an unsecured loan – Usually, loans of high value carry with them the burden of stringent norms and complex procedures. However, the case is different for Personal Loans. Personal Loans, being unsecured loans, do not require any collateral to be pledged as part of the loan application.
Are You Eligible For A Personal Loan?
The first step towards securing a Personal Loan is the eligibility test. You will need to fulfil all the criteria requested by the lender in order to be considered for the loan. Although meeting the basic eligibility requirement is not rocket science, it does require a fair bit of homework to pass this test. Since Personal Loans are unsecured loans, lenders depend a lot on your financial credibility to understand your background and predict whether you will be able to pay off the loan amount within a fixed time.
While the overall eligibility criteria vary from one bank to another, a few things are common for all. Let’s take a look.
Additional Reading: 6 Ways To Foolproof Your Personal Loan Application
Age
The basic requirement is that the borrower has to be within 21-60 years of age. For those who are self-employed, the lower limit is 22 years and the upper limit is 55 years.
Ticked this one off? Fantastic! Let’s move on.
Income
For those residing in metro cities, the income requirement is Rs. 20,000 per month while for those in non-metro cities, it’s Rs. 15,000 per month. If you are self-employed, you are eligible for a Personal Loan only if you make Rs. 25,000 per month or more.
Credit Score
You need a Credit Score that’s at least 700 or more to be eligible for a Personal Loan. Most times, this is an absolute requirement and there might be no way you can avoid it. If you are unsure about your Credit Score, use this tool to figure it out.
For the ones with a low Credit Score, there is a handful of things that you can do to get your score back on track. Before applying for a Personal Loan, make sure you have a Credit Score that supports you all the way through.
If you meet all the criteria mentioned above, chances are you will get approved for a Personal Loan in no time. However, there is a catch here.
Additional Reading: 6 Common Reasons For Personal Loan Rejection
Things To Consider Before Getting A Personal Loan
Personal Loans can be tricky if you have never used one before. For instance, you may not know a thing about interest rates or you may be blissfully unaware of the various fees involved. When it comes to Personal Loans, it helps to exercise a bit of caution. Here are a couple of things to help you figure things out and make an informed move.
- Interest Rates:
Interest rates can either be fixed or variable, depending on what you choose. The rates are a little high for Personal Loans since they are collateral-free and carry a significant amount of risk for the lender.
2. Costs Involved
Typically, banks charge a nominal processing fee at the time of disbursal of the loan. Apart from the processing fee, you may be required to pay other charges as part of the deal. Make sure to read the fine print on your loan document before you hit the go button.
Additional Reading: Personal Loan Offers With Zero Processing Fee
3. EMI
Calculate your EMIs well before you apply for a Personal Loan. That way, you will be in charge of your finances and be ready to plan your expenses efficiently. Use this EMI calculator to figure out your exact loan amount.
4. Repayment
You will need to pay back the entire amount borrowed within 4-5 years. Consider your current financial situation and try to assess whether you can repay the entire amount within the allotted time span.
5. Look For Better Rates
Not all Personal Loan offers are the same. While some come up with a host of add-on offers, some are straightforward and downright simple. Look for the ones offering lower rates of interest. If you already have an excellent Credit Score, use it to negotiate for better deals on your Personal Loan.
Choosing The Right Personal Loan
How do you figure out whether you have chosen the right loan? Well, it’s simple. Research, research, research. Read about the offers, compare the prices, and assess your financial situation before you apply for a Personal Loan.
Ready to begin your journey? We are more than glad to help.