Read useful information on Personal Loans in
India
Personal Loans
Personal loan is a lump sum amount that you take either from a bank or building society or another lender. Such loans help you to take care of your immediate requirements without much of a hassle. In fact, personal loan is one of the quickest ways of borrowing money. Also, no questions regarding the end use of the loan are asked. You can use the loan amount for any purpose such as home renovation, marriage expenses, medical expenses, holidays, consumer durables, higher education etc. While applying for the loan, the lender usually conducts a credit worthiness check, before giving the loan. Personal loans are repayable in equal monthly installments (EMIs) and the loan tenure varies from 1 to 5 years.
The maximum amount of personal loan for which you are eligible depends upon your take-home salary. The exact loan amount depends on your eligibility and takes into account many other things as well, like your credit rating, job security, residential location and the ability to repay the loan amount in time. You can also apply jointly with a co-applicant, say your spouse for personal loan. This allows you to increase your loan eligibility, as the income of your spouse is also added to your income, for the purpose of calculating the total loan amount. The loan range in case of personal loan is Rs. 50,000 to Rs. 20, 00,000.
As personal loans are given without any security and involve a high risk, the interest charged is usually more as compared to other loans, usually varying from 12 to 24%. Apart from this, interest processing fee is also charged from the borrowers. Processing fee is payable at the time of processing of loan application. A pre-payment fee is payable in case you decide to pre-close your loan account. Both processing fee and pre-payment fee are in the range of 2-3%. You can get the benefits of preferred interest rates, priority processing and simpler documentation, if you are an existing customer with the bank. Generally, personal loans are sanctioned within 72 hours.
Types of Personal Loans
- A secured loan is one in which you need to attach a guarantee against the sum of money borrowed. This can either be in the form of your property or any fixed/movable asset. Upon default, there is a risk of the asset being taken over by the bank and sold off.
- An unsecured loan is one in which no security needs to given for the money borrowed. However, in this case, the lender would be charging a higher rate of interest, taking into account the high risk involved in lending the sum. In case the recipient fails to repay the loan, the lender can seek legal help to make up for the loss incurred.
Eligibility Criteria for Personal Loans
Salaried Individuals
- Minimum Age of the Applicant - 21 years
- Maximum Age of Applicant at Loan Maturity - 58 years
- Minimum Employment Period - 2 years in total and 1 year at present organization
- Minimum Income - Rs. 8000 per month
Self Employed Professionals & Businessman
- Minimum Age of the Applicant - 25 years
- Maximum age of Applicant at Loan Maturity - 65 years
- Minimum Business Period - Minimum 3 years in current business and 5 years total experience
- Minimum Annual Income - Rs.60,000
Documents Required for Personal Loan
- Bank Statement for last three months (where salary/income is credited)
- Salary Slips for last three months (if salaried) or ITR for the last two years (if self employed)
- Proof of Continuity in Current Job - Form 16 / Company Appointment Letter (if salaried)
- Proof of Identity (Copy Of Passport / Driving License / Voters ID / PAN Card / Photo Credit Card / Employee ID Card)
- Proof of Residence (Copy Of Ration Card / Utility Bill / LIC Policy Receipt)
- Proof of Qualification Highest Degree (for Professionals / Govt employees)
- For Professionals - proof of qualification, say degree, registration with professional council, etc.
- Two passport size photographs
