In Simple terms,a personal loan is an unsecured loan taken by individuals to fulfill their personal needs. There can be several purposes of Personal loans depending on the needs of the person.
For some Personal loans can help them buy a new car or a house and for some it may help to fulfill the needs of children’s higher education,medical or emergency expenses. It can also be used for short term goals like traveling,vacation,wedding expenses etc.
Who can give Personal Loans
All banks and NBFC provides personal loans. Though there are many institutes which grant personal loans, some of them are mentioned below :
|BANK NAME||INTEREST RATE||TENURE|
|AXIS BANK||12% TO 24%||12 TO 36 MONTHS|
|SBI BANK||12.50% TO 16.60%||6 MONTHS TO 72 MONTHS|
|HDFC BANK||10.75% TO 22%||12 MONTHS TO 60 MONTHS|
|KOTAK BANK||10.50% TO 19.99%||12 MONTHS TO 60 MONTHS|
|CANARA BANK||13% TO 14%||12 MONTHS TO 48 MONTHS|
|CITI BANK||10.50% TO 18.99%||12 MONTHS TO 60 MONTHS|
Personal Loan Eligibility Criteria
AGE: For salaried employees,the age of the applicant should be between 21 to 60 years and for self-employed professionals it can go up to 65 years
INCOME: The minimum income criteria to take a personal loan varies from one financial institution to another.Some of the financial institutions consider 25000 INR and others may give a loan on 15000 INR only. So one should check the criteria before applying for a loan.
EMPLOYMENT: The applicant should have a stable career and must have been employed for the past 2 years in the same organization. Individual ability is also affected by the company he employed with as company should be listed as a “company for at least past five years”
CREDIT SCORE: The applicant should have a good credit score to avail a personal loan facility. The credit score should be between 650 to 700.
Other Important Parameters to consider
RATES: Personal loan is an unsecured loan and hence the interest rate is always 3 to 10 percent higher than the secured loans.So one should check with the financial institution before applying for a personal loan.
Flat interest rate and reduced rate: One should check these parameters as in case of flat interest rate the interest-paying liability will not decrease with time as you continue to pay on the initial principal amount.
Pre-paying charges: One should check to prepay charges with the bank as some bank charge 1 to 3% on principal outstanding.
Credit card loan vs personal loan: In case of a credit card loan you can avail loan facility of that particular card issuer bank and in case of any other personal loan you can approach any bank you like.
Default: In case you are not able to pay the scheduled payment of your EMI on time,the lender first will try to recover the due payments through settlement and recovery agents. If such attempts fail,then your loan account is marked as a default and the loan will show on your credit report as a defaulter which will affect your credit score negatively.
Joint loan: A person can apply for a personal loan with another applicant. This also increases the income eligibility and the person can apply for a bigger amount of loan, as the other applicant’s income gets added to the personal income.
Documents Required to take Personal Loan
PHOTO IDENTIFICATION PROOF: Voter ID Card / Passport / PAN Card / Driving License / Aadhaar Card.
INCOME PROOF: Last 3 months Payslip & Bank Statement of last 3 months.
ADDRESS PROOF: Ration Card / Passport / Utility Bill.
PASSPORT SIZE PHOTOGRAPH: 1 passport size color photograph
a) Salaried Individuals: Latest 3 month’s Salary Slips and Form 16, Bank Statements of 6 months.
b) Self Employed Individuals: Latest 1 year bank statement for both savings and current account.
PERSONAL LOAN APPLICATION FORM: Personal Loan Application Form duly filled.
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