• All You Need to Know About Small Amount Personal Loans

    Small amount personal loans, or short-term loans as they are also called, are becoming increasingly popular because they are easy to avail. The terms and conditions with which they come are also quite favourable to borrowers. Small amount personal loans can be availed by both salaried employees as well as self-employed individuals. They are also available to first-time borrowers.

    Usage of Small Amount Personal Loan

    Small amount personal loans can be used for a variety of reasons like:

    • Meeting cash flow requirements in business
    • Meeting expenses related to medical emergencies
    • Travelling
    • Renovating your home
    • Funding extra wedding expenses
    • Paying off credit card dues
    • Financing funeral expenses
    • Paying for relocation expenses
    • Purchasing a bicycle/scooter
    • Purchasing a present for your loved ones
    • Undertaking a training program
    • Updating your gadgets
    • Funding your basic needs

    Small Amount loan: Tenure, Maximum and Minimum Amount

    The minimum amount you can borrow through a small amount personal loan varies from lender to lender, but on an average, it is around Rs.10,000. The maximum amount you can obtain through a small amount personal loan is around Rs.2 lakh.

    Some lenders even offer small amount personal loans for amounts as low as Rs.5,000. The tenure of these loans differs from lender to lender, but most lenders offer a minimum tenure of three months and a maximum tenure of two years. However, there are lenders that offer small amount personal loans for tenures as short as 15 days as well.

    Since most banks and financial institutions that offer personal loans provide minimum amounts of Rs.50,000 and upwards, customers who wish to avail smaller amounts have had to approach their local moneylenders to fund their immediate financial emergencies. Thanks to the exponential growth of fintech companies and lending portals, customers can now get loans starting from as low as Rs.5,000 at reasonable terms, and no longer have to bear with the high interest rates offered by local moneylenders.

    Eligibility Criteria for Small Amount Personal Loans

    An applicant must fulfil the following eligibility criteria to avail a small amount personal loan:

    • Resident of India
    • Salaried employee or a self-employed individual
    • At least 21 years of age at the time of applying for the loan
    • Earn a minimum of Rs.10,000 per month (varies from lender to lender)
    • Should have a valid government ID

    Who are Small Amount Personal Loans for?

    Small amount personal loans can be availed by any salaried employee or self-employed individual in India. The amount can be taken to meet your personal as well as your professional financial requirements. Even businessmen and entrepreneurs can obtain a small amount personal loan to meet working capital requirements.

    Features of Small Amount Personal Loans

    The following are the key features of small amount personal loans:

    • Instant access to funds
    • Competitive interest rates
    • Quick approval
    • Flexible repayment options
    • 100% transparency in the borrowing process
    • Paperless approval
    • Speedy disbursal
    • No collateral

    Difference between Small Amount Personal Loans Offered by Registered Portals and Moneylenders

    The following are the major differences between taking a small amount personal loan from a registered lender and taking one from your local moneylender:

    • Interest rates: Private moneylenders usually charge a high rate of interest when lending money to customers. Registered lenders, on the other hand, offer significantly lower rates of interest. The cost of acquisition of funds from private moneylenders is quite high but is comparatively lower for registered lenders.
    • Credit score: When you borrow money from your local moneylender, it does not reflect on your credit history as it is a private deal. Taking a small amount personal loan from a registered lender, on the other hand, will reflect on your credit history. If you repay your small amount personal loan on time and do not default on payments, your credit score will increase too.
    • Loan amount: Availing a small amount personal loan from a registered lender will involve thorough background checks by the lender. Your credit history, income, and repayment ability will be taken into consideration by the lender, and you will only be eligible for an amount that the lender is certain you will repay. Local moneylenders, on the other hand, do not carry out stringent eligibility checks, thereby making it easy for you to fall into a debt trap.
    • Terms and conditions: A small amount personal loan from a registered lender will come with clearly defined terms and conditions regarding interest rates, repayment tenures, etc. A loan from a private moneylender, on the other hand, usually has no legal binding, which means that the lender can increase the interest rate applicable to your loan. They could even ask you to repay the amount borrowed before the end of the tenure due to a lack of clear terms and conditions.

    Documents Required for Small Amount Personal Loans

    The following are required to apply for a small amount personal loan:

    • ID proof (PAN card, Aadhaar card, passport, or voter ID)
    • Age proof (Voter ID, Aadhaar card, passport, or driving license)
    • Bank statement for the past six months
    • Passport-sized photographs
    • Income proof (income declaration statement, or ITR of the past year, or salary slips for the past three months)

    Why you should consider taking small amount personal loans from BankBazaar?

    BankBazaar has tied-up with some of the best and most reliable banks and financial institutions in India, thereby making it easy for customers to compare the terms and conditions of various lenders to find the one that best suits their needs. The interest rates are attractive and the repayment tenures are flexible. Thanks to paperless approval and easy application procedures, you can save a lot of time, effort and money. Moreover, the disbursal process is quick, thus ensuring that you receive the required amount instantly.

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