A Personal Loan can be of great help especially if you find you find yourself in need of funds. A wedding on the cards or urgent house repairs, it could be absolutely anything, a Personal Loan really comes in handy when you’re facing financial crunch! Getting a Personal Loan tends to be a little easier than any other type of loan but before you off applying for one, it would makes sense to understand what you’re getting into. That’s what we’re going to help you with. We’re going to tell you everything you need to know about Personal Loans. Let’s begin with what Personal Loan is.
What’s a Personal Loan?
A Personal Loan is meant for financing your personal needs. These loans are unsecured loans, and hence banks thoroughly check your credit history, income and repayment history before sanctioning the loan amount.
Personal Loan Documents
Most banking institutions require you to submit a similar set of documents when applying for a Personal Loan. You will need to submit your identity proof, income proof, residence proof, and proof of age documents at the bank. The accepted list of documents are:
- Ration Card or Voter’s Card
- Passport
- Telephone/mobile bill
- Driver’s License
- Last 3 months salary slip along with a copy of your Form 16 and ITR of last two years
- Last 3 months bank statement of your salary account
- Proof of employment certificate
Generally speaking, anyone aged between 21 to 60 years, can apply for a Personal Loan.
How much can you borrow?
Again various factors determine the amount that can be borrowed by an individual.
- How much do you earn?
- Where are you employed?
- Which sector/company do you work for?
- Do you have any other loans?
- What is your CIBIL credit score?
The above factors more or less determine your Personal Loan eligibility. Normally, banks offer an amount, the EMI of which does not cross 30%-40% of your monthly earning.
What is the tenure of a Personal Loan?
Generally speaking, most banks have a tenure of 12 to 60 months for repaying a Personal Loan. This tenure may change depending on your income or can be decided at the discretion of the bank.
What is the rate of interest?
Speaking about the interest rate on Personal Loans; this varies from one bank to other. Generally, the rate of interest ranges between 14% and 20%. Every bank has a different interest rate for Personal Loan, so check with your bank before applying for one.
Don’t forget that there are processing fees as well. Usually, the processing fee is 2%-3% of the entire loan amount. In case you foreclose your loan, you might have to pay a penalty of 2%-5% on the principal outstanding amount.
Personal Loan EMI calculator
Now that you know all about the documentation process and interest rates applicable to your Personal Loan, you’re probably wondering how much your monthly instalments will come up to. You don’t have to wonder much longer. Try our Personal Loan EMI calculator.
A Personal Loan is relatively easy to get if you meet the eligibility criteria. But don’t forget that once you get your loan you need to make sure that you pay your monthly instalments on time. Not doing this is going to negatively impact your credit score and nobody wants that!