What is personal loan?

What is personal loan?

Now can get access to funds to fulfil your various life aspirations with the help of a personal loan. You no longer need to put your dreams on the back burner and wait until you can save up. Whether you want to buy the latest phone, take off on vacation or plan your dream wedding, you can do it all with a Personal Loan. While you do not have to provide any collateral to avail this loan, you need to check if you are eligible and provide the necessary Personal Loan documents requested by your lender. Here is all you need to know.

Personal Loan Features & Benefits

• No end-usage restriction
• Loan amount of up to Rs. 40 lakh, which can exceed depending on lenders' discretion.
• Repayment tenure usually ranges between 1 year and 5 years, with some banks/NBFCs offering longer tenures.
• Minimal documentation.
• The interest rates usually start from 10.50% p.a. with some PSU banks offering lower interest rates.
• Quick disbursals.
• Applicants having excellent credit profiles may also qualify for preapproved/prequalified personal loans with instant disbursal

Personal Loan Eligibility Criteria

Banks like to ensure that you can repay the loan amount. This is why they measure your eligibility before sanctioning the loan. The essential eligibility criteria for Personal Loans are as under:

• You should be an Indian citizen.
• You should be a salaried employee with a reputed organisation or a self-employed individual.
• You should be in the age group of 22-60 years (at the time of loan maturity).
• You should be drawing a minimum monthly income of INR 20,000.
• As a salaried individual, you should be employed with the same organisation for a minimum of two consecutive years.
• You should have decent credit scores of 700-750 and above.
• If you fit into the above eligibility criteria, you can begin the Loan application process, including filling a form and submitting the necessary Personal Loan documents.

Personal Loan Required Documents

The Personal Loan documents required depend on whether you are a salaried employee or a self-employed individual applying for the loan.

Documents Required From Salaried Employees:

• A duly filled loan application form, downloadable from the website of the lender.
• A copy of your ID proof document, e.g., PAN card, Aadhaar, passport, voter's ID, driver's license, or employee ID card.
• A copy of your address proof document, e.g., Aadhaar, passport, voter's ID, driver's license, or latest utility bills.
• A copy of your income proof documents such as bank statements of the last three months, last three salary slips and latest Form 16.

Conclusion

Personal loans can serve as a real answer to the short-time financial requirements, because they do not require collateral and allow you to borrow money quickly. However, if not well managed, it comes with high interest costs and stringent payback arrangements which make the instruments expensive.One should look at the pros and cons of a personal loan, explore other funding options as well research other lenders and if the loan aligns with your long-term goal. Proper borrowing should always be pursued in a bid to maintain and achieve fiscal balance and reduce unnecessary borrowings.