Best Tips for Taking Out a Personal Loan
- 1 Best Tips for Taking Out a Personal Loan
- 1.1 How to check eligibility for a personal loans
- 1.2 Eligibility and interest rates for personal loans
- 1.3 How to avail personal loans online
“Personal loans are often portrayed as a financial olive branch to help individuals pay for large one-time expenses, often to satisfy their desire for instant gratification.” The well thought definition coined by Logan Allec, a certified accountant and owner of a successful personal finance website.
Personal loans are unsecured loans that you can avail from a bank or, these days, even non-banking financial corporations (NBFCs). Unsecured loans do not require any collateral or security. Personal loans come with fixed interest rates for fixed periods of time. The tenure of a loan largely depends on the principal amount, and the rate of interest largely depends on the tenure of the loan.
Most banks offer personal loans based on a person’s credit history. Another option is to avail the instant personal loans using an Instant Personal Loan App. These apps are quite convenient in cases of emergency or to boost your finances when facing monetary shortcomings. But you need to exercise caution when using these apps and read the terms and conditions carefully, you would not want to be caught off guard about anything relating to your Personal Loan, as this can land you in serious financial strife.
Apart from that, there are pre-approved loan options. In the case of pre-approved loans, the bank shortlists a set of customers that have an overall good credit history and allows these customers to access a predetermined amount as a loan from the bank whenever they required it. The main advantage with a pre-approved loan is that it can be disbursed by the bank almost immediately and there is no additional paperwork required
How to check eligibility for a personal loans
There are many factors that influence whether you qualify for a personal loan, some of them are as follows.
The place where you reside plays an important part on whether you will acquire a personal loan. Often times, customers residing in metropolitan cities have a higher rate of success when applying for personal loans than those who reside in semi-urban or rural localities.
Earnings and Income
It is universally understood that the higher your earnings are, the higher chances you have of being eligible for a personal loan. This is due to the fact that people with higher incomes are perceived to have a lower credit risk. Based on your monthly income, the loan amount granted to you will be higher.
The job you hold, the organization you work for, the reputation of your firm and the nature of work your company influences your chances of loan approval. Banks and other money lending institutions take assurance in the fact you hold a stable job which means a steady flow of income being generated monthly.
The nature of your residence plays a big role when banks are scrutinizing your Personal Loan application. Lending institutions prefer customers who reside on their own property. If you are a homeowner, the chances of you getting a personal loan increase as you have fixed assets to your name and you do not have additional monthly expenses like rent and maintenance.
Eligibility and interest rates for personal loans
Apart from the above conditions, each bank has its own prerequisites when it comes to the eligibility of an individual and the interest rate best suited for them.
Terms and Conditions of ICICI bank
When approving an instant personal loan, ICICI will take into consideration the customer’s transaction history and credit score, and the relationship they have maintained with the bank.
If a loan has been taken prior, the monthly loan repayment cycle from the previous loan will reflect the financial responsibility of the customer. ICICI permits pre-approved and personal loans up to Rs.20 lakh for your various needs. The interest rates on these loans largely depend on the tenure of the loan which can range from 12 months to 60 months.
Terms and Conditions of Kotak Mahindra bank
For acquiring a personal loan from Kotak Mahindra, the requirements are as follows.
- The customer should be a citizen of India.
- The customer should be between the ages of 21 to 58 to apply for a personal loan.
- The customer should hold employment in an MNC, either public or private in nature.
- The customer must have minimum work experience of at least 12 months.
- The customer should have a net income of Rs. 20,000 per month.
Kotak Mahindra offers personal loans with interest rates varying from 10.99% to 24% annually. Their tenure period ranges from 12 months to 60 months.
Terms and Conditions of Bajaj Finserv Ltd.
Bajaj Finserv claims to be India’s fastest personal loan provider. Through their online portal, you can sign up for a personal loan. Once your application gets approved your loan will be disbursed within 24 hours. Bajaj Finserv provides personal loans up to Rs. 25 lakhs.
- The documents required for registration are ID proof, KYC details and bank documents.
- The customer should be an Indian citizen, residing in the country.
- The customer should be between the ages of 23 to 58 years
- The customer should hold employment in a public or private MNC.
- The customer should have a net income of Rs.37000 per month
- The customer should submit their salaried bank account statement of the previous 3 months.
Depending on your location, the minimum monthly income required to qualify for a loan will differ. Let’s say, you are earning RS. 25,000 but apply for a personal loan in Pune, it will be declined as the minimum monthly income is Rs.35000 in that city. Monthly earnings required to avail personal loans will depend on where you reside, in Tier 1 or Tier 2 cities.
How to avail personal loans online
In recent times, anyone can apply for a personal loan online. Well, almost anyone; age, citizenship, and financial status are taken into consideration by money lending organizations to calculate your loan repayment abilities.
The process of availing a personal loan is now less complicated and simpler, benefiting customers with their ‘ease of use’ approach. Visiting your bank’s website provides you with diverse options on how to apply for an online personal loan. Fill in the online application form and select the loan amount required before proceeding.
Most banks have similar conditions required to avail personal loans online. To give you an idea of these conditions, listed here are the criteria for HDFC customers.
- The customer should be a resident of India.
- The customer should be between the ages of 21 to 60 years.
- The customer should be employed in an MNC (private or public undertaking).
- The customer should have been employed for at least 24 months or more.
- The customer should earn a net income of Rs.15000 per month. If they reside in Mumbai, Delhi, Bangalore, Pune, Hyderabad, Cochin, Ahmedabad and Chennai, the net income earned should be Rs.25000.
In case you feel overwhelmed, there are tons of online calculating sites that estimate your odds, statistically detailing your personal loan, the EMI due over different payment cycles through various interest rates and accounting for fees or insurance relating to the loan repayment amount that in some cases, is higher than advertised.
These online personal loan calculators compute the best repayment plans and show you the most efficient and beneficial loan-repayment cycles.