Personal Loan as its name itself telling that a loan which is availed by an individual from a Bank or Non-Banking Financial Company (NBFC). This loan can be used for personal purpose. It can be anything like, wedding expenses, travel expenses, medical expenses, repayment someone, purchasing gadgets or furniture, children’s higher education, etc, etc. You can use finance as per your requirement. Bank or Financial Institute will not monitor and will never ask for these expenses. You are free to use. You are not supposed to tell anyone for these expenses. And the best part is you do not have to disclose the reason for availing this loan.
Personal Loan is unsecure consumer loan. It means there is no need of any security against the loan. In other way, there is no requirement of collateral while availing a personal loan. Interest rate is always high for unsecure loan. Personal Loan is totally opposed with Car Loan or Home Loan. This type of loan is smaller than mortgage loan and term is also short as compared than Mortgage Loan.
Eligibility for Personal Loan :
Personal Loan provides by Bank and NBFC. It’s a very common loan which can be avail very easily but every bank and NBFC’s have some criteria. You must be eligible for that as personal loan is unsecured loan so this type of loan is very risky for bank or NBFC’s. So till the time bank’s or NBFC not satisfied with an individual’s profile, they are not disbursing the loan.
Here are some eligibility criteria which is very common in all Bank and NBFC.
Monthly Income : Personal Loan can be availed by all whether borrower is Salaried, Self Employed or a Professional. For salaried person, the role of employer is very important. If a person works in Central, State or Local Government Department than it is very easy for him to avail this loan. And if borrower is working in a private company and that company is well known with sound track record then also it is easy to avail this loan. Employee should be working there atleast since past 12 months.
And if borrower is a business man or self employed, then your business should be one year old and thatbusiness should be in profit in past one year.
Age : Age is also one of the criteria. Minimum age limit is 21 and maximum age limit is 60. Generally this is followed by all the banks and NBFC. The age is considered just to make sure that you are at the age to repay the loan.
Documents required : Documentation is very simple and easy for Personal Loan. You need to submit below said papers to banks or NBFC than they check your eligibility. If any paper miss or incomplete, banks calls to borrower for complete the document so that they can proceed further.
Here are some documents for Salaried to support your eligibility and check your credit score
For Self Employed :
Loan Duration :It’s depends on mutual agreement between the borrower and the Banks or NBFC. Mostly Banks provides personal loan for minimum 1 year to maximum 5 years (12 Months to 60 Months). You must repay the loan in Equated Monthly Installment (EMI) every month and EMI depends on the loan amount, tenure and interest rate.
Disbursal of Loan : After submission of all the documents, normally banks take 5-7 days for disbursal. They check all the documents physically and if any document is incomplete then they call to borrower to submit that papers. Once all the papers submitted then they check Credit Score of the borrower. If all the eligibility meets its criteria then bank either transfer that loan amount to borrower’s bank account through NEFT or RTGS or Bank providesa banker cheque. There are some banks who approved and disburse loan amount is few hours under the terms and condition.
Loan Amount depends on : Usually Loan amount depends on borrower’s income. Banks calculate borrower’s income and paying capacity. The EMI of loan must not be more than 30-40% of borrower’s income. If there is any existing loan, that loan also considered when calculating the loan. For Self Employed, the loan value is determined on the basis of his business’s Profit & Loss account and his bank statement.
Interest Rates : Personal Loan have higher interest rates as it is unsecured consumer loan. Every Bank and NBFC have different rate of interest. And rate of interest also depends on borrower’s key factors including credit score, income level, loan amount, tenure and previous relationship with bank.
Foreclosure of Loan :When tenure is not completed and borrower wants to pay his outstanding, it’s called foreclosure of loan. Some of the lenders are charging 1-2% foreclosure charges on principal outstanding.
Benefit of Personal Loan
Sometimes if a borrower fit in all the eligibility criteria still bank does not grant a personal loan. This will be happening because banks does not allow personal loan to the personal living in the area which has higher rate of non-payment.
If borrower is unable to pay his EMI than its effects borrower’s credit rating.
Credit Bureau (India) Ltd (CIBIL) is India’s first credit information company and TransUnion, is a globally recognizedcredit reporting agency.
You should read also Getting A Business Loan Should Be Easy Now
If a person applied for personal loan, the financer first checks his/her CIBIL score. If CIBIL score is good, financer approves loan very easily and if not then they require more details, more documents and might be they will ask for guarantor also. Till the time, they are not satisfied; they will not approve and disburse the loan. So your CIBIL score play a crucial role when you are applying for personal loan.
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