You may have a bunch of questions regarding your Personal Loan. We’ve answered some of the frequently asked questions (FAQs) for you.
The ones who have never faced a financial crunch are lucky. But, the average Indian has definitely come across multiple instances where he/she had to either empty out their savings or had the need to borrow. And that’s when a Personal Loan comes in handy.
A Personal Loan is your saviour during financial emergencies or when you face a cash crunch. It has many advantages. The process is easy, quick, and paperless. Plus, it can boost your Credit Score too!
However, you may have a ton of questions pertaining to your Personal Loan. So, hold your horses and go through these Frequently Asked Questions (FAQs) on your Personal Loan before you check your eligibility and apply for it!
Additional Reading: Precautions To Take After Availing A Personal Loan
What is a Personal Loan?
A Personal Loan is an unsecured loan that is usually given by banks or a Non-Banking Financial Company (NBFC) to customers on the basis of a few things like income, age, credit history and employment history. This is an unsecured loan which means you don’t have to provide the lender with any collateral like property/gold to avail it. This type of loan is taken to fulfil your personal needs. In some cases, you might need to provide a collateral.
Does a Personal Loan have a minimum amount to be borrowed?
Well, this totally depends on the bank. And the minimum amount that can be borrowed will also vary from bank to bank. However, you can avail a Personal Loan for a minimum amount of Rs. 15,000.
What is the maximum amount of Personal Loan I can get?
Again, this amount will vary from each lender. But most banks will provide you a loan for up to Rs. 25 lakhs. This will also depend upon the applicant based on their credit history, income and repayment capacity. There are banks that do provide Personal Loans for amounts up to Rs. 40 lakhs as well. But this purely depends on the bank and the customer’s eligibility.
Additional Reading: Top 5 Personal Loans Of 2018
What is the tenure for a Personal Loan?
The tenure for repayment is generally set from 1 -6 years.
What are the documents required for a Personal Loan?
- Photo ID and age proof
- Signed Application form with a photograph
- Residence proof
- Bank statement from the last six months
The above are the general documents. However, if you are salaried, then you need to provide these as well:
- Salary slips from the last three months
- Form 16 or your Income Tax returns
If you are self-employed then you need to provide the lender with these documents:
- Income Tax returns from the last three years with income computation
- Balance sheet and Profit and Loss account which is CA certified or audited from the last three years
What about interest rates?
Every loan comes with an interest that is payable to the lender. A certain percentage is set on the principal amount by banks or the NFBC. Usually, the percentage is anywhere from 10.85% to 37%.
Will my loan have a processing fee?
A processing fee is a charge that you will have to pay when your loan gets disbursed. Usually, it is a fixed sum or a small percentage of the entire loan amount. Most banks are transparent about these fees and you can find out about it by checking the loan details before applying for it.
How is the EMI calculated?
Your Personal Loan Equated Monthly Instalment (EMI) is calculated by taking into account these four things:
- Loan Amount
- Loan Tenure
- Interest Rate and Processing Fee
- Amortisation details
So, if you want to quickly check on how much EMI you would have to pay on your Personal Loan, then you can use this EMI Calculator to do the same. Click here.
Additional Reading: Your Personal Loan EMI Calculator Is Here
Do Personal Loans need a Guarantor?
In most cases, a Personal Loan does not need a guarantor as it is an unsecured loan. That said, some banks may insist on having a guarantor.
Additional Reading: Everything You Need To Know About Guarantors In Personal Loans
Can I pre-pay my Personal Loan?
Repaying your loan before the tenure is called pre-payment. Whenever a customer is ready and willing to repay their Personal Loan, they can do so by intimating the bank about their wish.
Will pre-paying my Personal Loan have any charges?
Some banks do levy pre-payment charges on Personal Loans. It can either be a standard amount or a percentage of the total loan amount. This will depend on the bank and its policies it follows. Although, it may not be such a bad idea for you to check with your bank in advance about these charges.
How long does it take for a Personal Loan to get disbursed?
The responsibility of disbursing a loan lies solely with the bank. And this is further dependent on the verification of documents that you submit, your eligibility and other factors. However, if you were to apply for a Personal Loan through BankBazaar, the process is completely paperless and the application is instant.
Additional Reading: 9 Paperless Approval Personal Loans Available On BankBazaar
Is there a balance transfer facility available on Personal Loans?
A Personal Loan balance transfer is nothing but transferring your loan to another bank for another rate of interest. This can also be done if you want to switch from your current loan to another loan within the same bank. Again, the balance transfer facility is available only with a few select banks and the rules, procedure and policies may not be the same with all banks.
Additional Reading: Opting For A Personal Loan Balance Transfer? Factors To Keep In Mind
What happens when I default on a Personal Loan?
For starters, this is not the best way to go forward once you’ve taken a Personal Loan. However, if you do default on your loan for whatever reason, there will be consequences. The most damaging one will be to your credit history and it will affect your Credit Score. And when your Credit Score dips, you will not be considered for loans or Credit Cards in the future. Even banks blacklist customers who have defaulted on loans or who have a very low Credit Score.
Always remember that a Personal Loan is a responsibility and is very useful during when you’re facing a cash crunch. Hope we have answered all your queries! So, don’t just sit there go on and explore the many options we have in store for you.