Here are few benefits of personal loan:
• No security or collateral is required
Being an unsecured loan, there is no collateral of any asset required. It is offered on the basis of your credit hostory and repayment capacity.
• Less documentation
Many abhor applying for personal loans due to lengthy documentation process. But personal loans are approved with minimum documentation.
• Quick loan disbursement
These days it takes few hours for loan disbursement. If banks feels that you have the capacity to re-pay the loan within the stipulated time and need loan for genuine reason then getting a personal loan disbursement is easy.
• Fixed rate of interest over the tenure
Rate of interest on personal loan is fixed at the start of the tenure and remains constant throughout. So, it becomes easy for loan applicants to plan for their future EMIs well in advance.
• Flexible loan tenure of around 1-5 years
Personal loans offer loan tenure ranging from between 1 year to 5 years. So you have flexibility to choose your tenure as per your re-payment plan. Best is to opt for a lower tenure loan and save on the interest outlays.
• Easy EMI facility is available
Equated Monthly Instalments make the idea of loan simpler. Personal loans too offer easy EMI facilities and help you re-pay the principal amount over the tenure.
• It is a multipurpose loan
Unlike home loan or car loan, personal loans can be availed to meet almost all aspirations. So benefits of opting a personal loan are galore, but check your eligibility criteria in next chapter
Eligibility Criteria For Personal Loanr> Personal Loan is an ‘unsecured loan’, and banks conduct a thorough due diligence. Most importantly they check your financial stability.
Loan eligibility is dependent on several factors such as your credit score, monthly income, other ongoing EMIs, etc. These terms vary from one lender to another.
The eligibility criteria are as follows:
• Age Limit
If you are a salaried employee, then the age limit is 21-58 years.
Age limit for a self-employed businessman or woman and professional is 25-65 years.
• Monthly Income
Your net monthly salary is crucial to sanctioning your loan. Some lending institutions have a minimum monthly income criterion. While at some banks the eligibility criteria is Rs 25, 000 per month.
• Nature of Employment
Some of the basic employment types are salaried employees, professionals, Self-employed person or professionals. • Employment Term
If you have been job-hopping in the recent past, an approval could be difficult.
For instance, many lending institutions sanction loans to employees with at least two years work experience, and at least one year from your current employer.
Similarly, self-employed professionals must have a minimum of three years of experience. Some consider your overall work experience.
• Credit Score
This is a score assigned to you by a credit information company (for example companies such as CIBIL, Equifax, High Mark). It gives a prospective lending institution, a perspective about your history as a borrower.
A high credit score also gives you the bargaining power to negotiate better loan terms for yourself. Some banks have a minimum CIBIL Score requirement of 700, while some have 750. A score in the range of 700-900 is desirable
1. Processing Fee & Other Charges
Taking a Personal Loan does not end with interest rates; there are processing fees and other charges levied by lenders.
The processing fee is a one-time fee charged as a certain per cent of the Personal Loan amount, but subject to a minimum amount. It varies from lender to lender.
A higher processing fee impacts your total cash outflow while you apply for a Personal Loan.
The other charges include: stamp duty, late payment fee, cheque bounce charges, duplicate interest certificate issuance charge, duplicate statement issuance charge, duplicate amortization schedule charge, issuance charge for photocopy of loan agreement/documents, prepayment charges (also known as foreclosure charges) and so on, all of which these should be examined carefully.
2. Repayment Flexibility
Apart from the above crucial aspects, assess if the lender provides you with the flexibility to repay your loan sooner, and what will this cost you. This flexibility can help you prepay the loan ahead of time, as well as provide a relief in distressing times.
However, it's best to adopt financial discipline in order to repay the Personal Loan on time and maintain your financial health in the pink always. 3. Customer Service When you avail a Personal Loan in times of need, you wouldn't want it to be an unpleasant experience, do you?
Hence, ensure the customer service at the lender has high standards. This service can even help keep track of your loan, allow you to be in better control of your personal finances. Remember, while lenders will have varying customer service standards, there are some basics of good service that are universal.
4. Salary A salary highlights the repaying capacity of the borrower. A lender requests a borrower to furnish the latest salary slips.
A salary is considered adequate based on the loan applied for, expenses, outstanding loans (if any), and the city of residence, etc. 5. The Company You Work At
Almost all Indian banks categorise employers based on size and popularity of the company. If your employer falls under the highest category, you may be eligible for a higher loan amount at a lower rate of interest and vice versa.
6. Job Term
Banks and other lenders may analyse the time period you have been working at the current job and even the number of years of work experience.
A higher time span in your present job may work in your favour while procuring a loan. Lenders may also visit your employer to verify your details. 7. Your Current Economic Life Cycle A bank may not be hesitant in granting you a loan if you are settled and future prospects of earnings are bright, plus if you are residing in your current house for long. 8. Terms & Conditions Make sure you read the terms &condition carefully to make an informed choice. This will avoid issues later and ensure a pleasant, hassle-free experience.