Personal Loan

PERSONAL LOAN

A personal Loan is a loan meant for your personal use. It does not require any security or collateral and can be acquired easily. Typically, personal loans range from Rs. 50,000 to Rs. 30 lakhs with a tenure ranging from one to five years.

There are two times when the bank charges you for the personal loan: once when you are applying for the loan and once when you are pre-closing the loan. The fees when charged at the time of processing called as Processing Fees which vary from 2-3% of the loan amount and the second charge is the Prepayment Penalty which is paid at the time of pre-closure. This also varies from 2 – 3 %.

Personal Loan Eligibility Criteria

Personal loans eligibility criteria depend on the banks’ mitigating risks and at times can be fairly strict.

Salaried individuals, self-employed individuals and self-employed business people can avail a personal loan.

  • 1. Personal Loan Amount

    The amount which can be borrowed depends upon the repayment capacity of the individual. In banking terms, a personal loan’s EMI should not exceed 40% of your monthly take home income, where the EMIs for existing loans are also deducted.

  • 2. Personal Loan Interest Rates

    Personal loan rates vary from bank to bank, and are between 14%-26% depending upon your profile and the policies/scheme you decide to opt for.

  • 3. Personal Loan Partners

    Personal loans can also be taken with other partners that help you increase the loan amount you are eligible for. The valuation also features your partner’s income in turn increasing your chances of getting a personal loan.

Personal Loan Tips

  1. Do a smart, all inclusive comparison: While planning to take a personal loan, you will observe that interest rates vary from bank to bank. The preferred way to get an optimal loan is to compare the rate of interest or EMI, take into account the processing charges, documentation charges and pre-closure charges.
  2. Read the loan document: Before signing on for a personal loan, read the document properly. Ensure all the terms and conditions are filled in completely and match on those that were agreed upon while taking the loan.
  3. Do not present the bank with any false information: You might end up being blacklisted or never being eligible for a loan at the very least. Even if you get away with it, eventually the establishment will come down on you harder and stronger
  4. Processing charges will typically be levied on your personal loan: This is a bargaining point for you. Most banks would waive off your processing fee in the interest of disbursing the loan to you. Don’t forget to factor in these costs into your loan.
  5. One important tip is when selecting your EMI:. Do this very carefully. It will be a battle between paying off your loan in a shorter span of time or paying more over a longer period of time. The lower the tenure the lower the total interest you are paying in the long run.