Personal Loan in India


There are instances that you would want a quick time period mortgage to attend to sudden expenses. When that occurs, there are many picks of loans that you may choose from. The first-class desire might be to head for a non-public mortgage. Why?

It is because a personal loan is a brief time period loan that required no collateral i.E. Any security out of your stop.

The “no safety” nature of such loans makes this kind of finance as the most lucrative one. To that give up, in case you stumble upon any surprising or planner fees inclusive of vacations, clinical expenses, restructuring debts, etc. This kind of finance is a satisfactory one to move for.

However, you need to bear in mind the quick-term nature of this mortgage. Whereas mortgage loans come up with approximately 15 to 30 years of payback time, the non-public mortgage only gives you 1 to 5 years.

Benefits of personal Loan


This form of finance comes with an introduced advantage that you may use it for definitely any purpose (if the reason is criminal that is). Some of the motives for opting for this kind of finance are as follows:

If you need to renovate your own home.
If there’s a sudden wedding ceremony fee or every other extravagant party.
If you want to shop for a brand new and steeply-priced digital system, say like iPhones.
If you need to go on vacation with your loved ones.
If you have to stability your preceding money owed.
If you want to finance a few advertising endeavors.
Furthermore, private loans are desired due to the fact:

They are easy to get admission to to
The files required are minimal.
These factors have contributed to make this loan the most popular one in India. Therefore, most popular banks and NBFC in India avail this kind of mortgage to the masses.

Eligibility Criteria for Personal Loan

If you are an Indian national who is salaried or self employed or a professional in any other sector, you are eligible for a personal loan. However, because there is no collateral, the lenders would put you under extra scrutiny and you would have to pass the following factors to even be considered personal loans:

  1. Your ability to repay: You should have been working for your current company or running your own business for a certain number of years.
  2. Income: The amount you are earning should be within the regulations of the lender.
  3. Age: the minimum age to be lent the loan is 21 an the maximum age is 65
  4. Credit rating:  You should have a good credit score and a good credit history.
  5. Existing instalments: You shouldn’t have any prior liabilities left. If there are an, your income should be high enough to cover all of them.

Required Documents for Personal Loan in India

When it comes to documents required to initiate the entire process, most of the banks and he Non-Banking –Financial-Institutes have the same needs.

If you are a self-employed person:

  1. A duly filled and signed application form.
  2. An identity Proof that can include anything from the following:
    1. Passport
    2. Aadhar card
    3. Voter ID
    4. Driver’s license
  3. PAN card of the applicant.
  4. Proof of age that can now include the Aadhar card or the 10th class CBSE certificate.
  5. Bank statement of the last 6 months.
  6. Proof of address:
    1. Telephone bill
    2. Electricity bill
    3. Or any other utilities bill
  7. Proof of continuation of the enterprise.
  8. Latest ITR that will include the computation of income, recent balance sheet and profit and loss a/c for the last two months before applying for loan.
  9. Furthermore, you will also be required to present any of the following:
    1. Sole proprietorship declaration
    2. Partnership Deed
    3. Original copies of MOA and AOA

If you are a salaried individual

  1. A duly filled and signed application form.
  2. Proof of identification that can include the following:
    1. Aadhar card
    2. Driver’s license
    3. Voter ID card
  3. PAN Card of the applicant
  4. Your address proof:
    1. Electricity Bill
    2. Water Bill
    3. Phone Bill
  5. Bank statement of the last 6 months.
  6. Recent salary slip
  7. Latest version of Form 16

FAQs

Can I use personal loan for any purpose?

You can use personal loan for practically anything. The expense that you spend this loan ranges from big renovations, celebrations, vacations to things like debt consolidation. When it comes to things that you can spend this loan on, you would realize that it is very versatile.

Give me the outline for the Eligibility of personal loan?

In order to be eligible for personal loan, you should first be from India, and then you should be a salaried or a self employed individual. Now, once you have gotten this basis covered. Your income should be enough to maintain the loan repayment, your age should be within the regulation, your credit score should be good and you shouldn’t have any prior EMI left (if there are, your earnings should be high enough to cover them)

how long do I get to pay back the personal loan?

The tenure in which you have to pay back the personal loan is from 1 to 5 years. However, depending upon he financial institutes, you can get either a decrease or an increase in the tenure period.

Can I get low rates for personal loan?

In order to get the lowest rates for the personal loan, you have to inquire with multiple financial institutions and among them, get the finance that suits you best. However, there are certain portals out there where you can actually check the databases to see which financial institutes or banks are providing the lowest interest rates.

Are the rates of personal loan fixed or floating?

Depending upon the bank or the initial conditions of the loan, you can either get fixed or floating rates for loans. If the rate is fixed, the interest would be constant throughout the repayment tenure, otherwise if it is floating, the loan rates might vary during the repayment tenure.

Do I get any tax benefits by personal loan?

Usually, there is no tax benefit associated with personal loan. However, there are some cases in which if you are taking personal loans for reasons that involve home renovation, you would be granted tax benefit according to section 24. That being said, the deduction would only be on the basis of interest, not the principle amount.

What is the meaning of credit score?

There are three major credit agencies in India that have association with most financial institutions/banks in the country, and they score the individuals on the basis of their repayment track records on the basis of previous loans.

Can I apply for electronic clearing system for the purpose of repaying the personal loan?

Yes, you can apply for the ECS for repayment of the personal loan. However, if you want there are other ways to repay via cheques or cash depending on your banking institute.

What are the charges I have to pay for while applying for the personal loan?

While you are applying for the personal loan, you would also have to pay the processing fee which is about 1 to 2 percent of the principle amount.

Once my loan has been approved, how will I receive the amount?

Once the loan has been approved, you will get the amount wither through the check or the electronic transfer.

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