Are you in sudden need of funds? If yes, you can apply to a bank/NBFC for a personal loan. Banks and financial institutions in India offer personal loans to individuals for a number of purposes such as an upcoming wedding, a medical treatment, travel expenses, home renovation, educational expenses, etc.
As long as you meet the eligibility criteria of the lender and have a good credit score, you shouldn’t find it difficult to get a personal loan at a good interest rate. That said, it is necessary to do your research before applying for a personal loan. Here, we’ve listed a few frequently asked questions about personal loans, which will help you familiarise yourself with the concept.
Most lenders specify the eligibility criteria that you will need to meet for your loan application to be approved on their respective websites. You can also use the personal loan eligibility calculator tool, which you will find on the websites of banks and financial institutions and on third-party financial services websites like BankBazaar.com.
The maximum sum of money that you will be able to borrow from a bank will vary based on a number of factors. If you are a salaried employee, your monthly EMI should ideally not exceed 30% of your monthly pay. Also, the bank/NBFC will take into account if you have any existing loans for which you pay EMIs. Individuals who are self-employed will be offered a loan amount as per the profits that are earned through their business. The concerned individual’s other financial liabilities will also be taken into account. The maximum loan amount offered will also depend on the lender’s own terms and conditions.
Yes, applying for a personal loan online saves you a considerable amount of time and effort, given that you can do it from the comfort of your house. Certain third-party financial services websites like BankBazaar.com also offer paperless approval, wherein you will not be required to submit any paperwork to the lender for your loan to be approved. The application process is also completely secure.
Most banks/financial institutions allow borrowers to choose a loan tenure between 1 year and 5 years, based on their convenience.
While the exact documents required vary from lender to lender, listed below are a few general documents that most banks/financial institutions usually require applicants to submit:
A few things that you should consider when applying for a personal loan are as follows:
You can reduce the EMI for a personal loan by improving/maintaining a credit score over 750. If you have a good relationship with the bank, you can negotiate for a better interest rate or a relationship discount.
Certain lenders may allow you to pre-pay the loan amount, based on their respective terms and conditions. It is likely that you will be charged a pre-payment fee. Thus, if you intend to pre-pay your loan during the loan tenure, make sure to check if your lender allows this.
If you have a good credit score, the chances of you being offered the loan at a low interest rate are quite high. Your credit score indicates your creditworthiness and your repayment ability. If you are looking to apply for a personal loan, it is advisable to maintain a credit score that is over 750. Individuals with a very low credit score may be denied a loan altogether, while those with a moderate credit score may be offered a personal loan, but at a high interest rate.
If you are a pre-approved customer, the loan amount will be disbursed to your account quickly. If you are applying through offline channels, you will need to submit the required documents and wait for your loan request to be approved, post which you will receive the loan amount. If you apply through third-party financial services websites like BankBazaar.com, your loan amount will be disbursed in a timely manner once your application is approved.
As mentioned earlier, it is important to do your research before applying for a personal loan. It is advisable to use a third-party aggregator website like BankBazaar.com to compare loans offered by different banks and financial institutions. You can, thus, check and compare the interest rate charged, processing fee charged, loan amount offered, etc., by different lenders and make a decision accordingly.
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