Personal Loan

A Personal Loan is a form of financial assistance provided by different banks and NBFCs. It can be used for personal needs such as medical emergencies, higher education, marriage expenses, holiday plans, and many more. There is no constraint on how the borrowed amount is actually used, unlike certain other types of loans; the borrower has complete freedom to use the money for whatever reason they choose.

A personal loan has two essential properties:

Total flexibility on end-use. There are no restrictions on how you can spend the loan amount. This is in contrast to a home loan or car loan where the amount of the loan can only be used to purchase a property or a vehicle only. You're free to use the money in any way that you want.

Non-requirement of collateral. Personal loans are unsecured loans, meaning you are not required to provide the lender with any collateral in the form of assets, shares or any other properties.

How Does A Personal Loan Work?

• You can apply for a personal loan online, with a bank, or any financial institution.
• The official website of most of the banks and NBFCs have the facility to apply for a personal loan with a single click.
• Your personal loan eligibility is decided based on various factors like your credit score, income, age, employment type, and a few other factors.
• If the financial institution feels that your eligibility criteria are favorable, they will approve your personal loan and disburse the amount into your account.
• Now, the personal loan amount could be disbursed as cash into your account or the lender may provide you with a pre-loaded card that can be used for your purchases.
• Repayments are made through monthly EMIs over the duration of the loan. Most banks do permit part payments and pre-closure of your personal loan.

Features and Benefits of Personal Loans

• Collateral-free loan
• No end-use restriction
• Interest rate starting from 10.25% per annum
• Loan amount of up to Rs.40 Lakhs, which can exceed depending on the lenders' discretion
• Repayment tenure of up to 60 months, which may exceed on case to case basis
• Minimal documentation
• Quick disbursals

Documents For NRIs

• Your passport copy
• Visa copy
• Your official Email ID or the HR’s Email ID
• Bank statements
• Salary certificate or salary slips
• NRO/NRE bank statements of the past 6 months
• Identity proof, income proof, residence proof, and assets.
• Recently taken passport size photographs of yourself and the guarantors

How To Apply For A Personal Loan?

Online Apply Via CreditMantri

• Compare the personal loans from various lenders
• Choose the personal loan you want to apply for and go to the application page.
• Enter the basic details required.
• Click on ‘view eligible personal loan offers and apply’ to see the offers available according to your eligibility.
• Click Next
• An OTP will be delivered to your mobile. Enter this OTP for verification
• Submit the application.

Online Apply Through The Bank’s Website

Before you apply through the bank’s website, go to CreditMantri to know more about the personal loan.

• Go to the bank’s website.
• Under the loans section, choose personal loans
• Click on ‘Apply Now’
• Enter the details in the application form and submit
• The bank will evaluate your application and ask you to submit the required KYC documents.

Other modes to apply:

• Netbanking account: If the individual has an existing relationship with the bank
• Offline by visiting the bank’s branch
• You can leave a request for a personal loan application through Email or the customer service center of the bank.
• Nowadays, you can apply for personal loans via ATM kiosks as well.

Personal Loan Fees and Charges

The various personal loan fees and charges are as follows:

• Processing fees
• Goods and services tax (GST)
• Verification charges
• Charges levied for issuing duplicate statement
• Penalty for prepayment and part payment of loans
• Penalty for defaults

Uses of Personal Loans

A personal loan has a wide range of uses and can come in handy for meeting either planned or emergency expenditure.

• Debt consolidation from other loans or credit cards
• Creating high value purchases
• When there is a cash crunch
• For meeting sudden business or educational expenses
• Paying for a holiday
• Buying high-end electronic gadgets, household appliances, wedding expenses, emergency medical expenses, home renovations, etc.
• For buying a vehicle if the interest rate on the personal loan is lower compared to vehicle loan.

Personal Loan Interest Rates

Before you apply, check out the personal loan interest rates offered by various lenders. Then, compare and apply for the personal loan with the lender that offers the best rate. Personal loan interest rates fall in the range of 8.30% per annum to 49% per annum. If you have a good credit score and relationship with the bank, then you will get preferential interest rates.

Factors Affecting Personal Loan Interest Rates

The various factors on which your personal loan interest rates depend are:

• Credit score:

  Every lender checks the credit score and credit history before giving personal loans. They evaluate this to minimize the risk of any defaults from the borrowers. A high credit score indicates that the loans and credit card bills have been paid on time. So, lower interest rates are provided to such applicants.

• Monthly income:

  Lenders look for people with higher monthly incomes since borrowers with bigger monthly incomes are likely to make timely repayments. The affordability for the loan increases with greater monthly income. The minimum income criteria and eligibility will vary across banks

• The reputation of your organization and the type of employment:

  These are crucial factors in deciding the interest rates. Those who work for a reputed organization and those who have stable employment can obtain loans at comparatively lower interest rates.

  Salaried employees may get different interest rates as compared to self-employed professionals. Government employees are usually provided personal loans at lower interest rates because of their job security and certainty of regular income. People working with MNCs and reputed private sector organizations are usually given lower interest rates than other private sector organizations.

• Your Relationship with the Bank or NBFC:

  If you already share a good relationship with the bank or NBFC from which you have taken loans or credit cards, then you can get lower interest rates on your personal loans. You will also be eligible for pre-approved loans, deals, and credit cards from the bank or NBFC.

How much loan amount can I obtain?

Personal loan amounts vary from Rs.10,000 to Rs.50 lakhs. The amount must be consistent with repaying capacity. The final approved loan sum is based on the lending requirements used by the bank/NBFC and how they determine your ability to repay the loan.

The Most Essential Factor In Personal Loan Approvals

Your credit score and credit report are the most important factors in personal loan approval. If you have defaulted on bill or EMI payments, your credit score and your credit report will not be up to the mark. On the other hand, if you have paid your EMIs and your bills on time, your credit score and credit report will be good. This indicates to your lender that you have good financial discipline, are capable of paying your loan on time, and are creditworthy. Since a personal loan is an unsecured loan that is collateral-free, a lender usually determines whether he wants to give you a loan or not based on your creditworthiness.

Minimum Credit Score For Personal Loan Eligibility

It is usually recommended to have a credit score of 750 or above to be eligible for a personal loan. The higher your ranking, the better your chances of qualifying would be. A credit score of 750 means that a strong track record of making timely repayments for a prolonged period of time has been demonstrated by the client.

My credit score is below 750. Will I get a personal loan?

There is no guarantee of definitely getting a personal loan for any given credit score . Your chances of being accepted however are considerably higher if you have a score above 750. A score that is slightly below 750 at the same time does not necessarily mean that your request will be denied. Some possible results of your personal loan application are listed below:

• If your score ranges from 300-599, you will not be eligible for a personal loan. A low score is an alert to lenders in this area that you do not have a history of good credit behavior. The majority of lenders will reject your request right away.
• A credit score of 600-749 - You might have a probability of being accepted by certain lenders, but it is not a high score. They may look at other factors, such as the stability of your career, your annual income, and the magnitude of your other liabilities, which will affect your repayment potential in the future. If based on all these aspects, the lender feels that you have the potential to make timely repayment, your application has a chance of being accepted. However, if you are about to apply for a personal loan, it is advisable to raise your score to 750.
• A credit score of 750 and above - With such a score, you have a good chance of securing a loan. A high score has multiple other benefits: the approval process will be much quicker; the amount of the loan could be huge, and you may be able to negotiate a lower interest rate. When your credit score is high, the entire loan approval process is much easier.

Personal loan Prepayment and Part Payment

If you want to pay your debt before the end of the loan repayment period, it is called pre-payment or foreclosure. The various types of prepayment are:

• Full prepayment
• Part prepayment
• Part payment

How To Avoid Personal Loan Rejection?

Before you apply for a loan, make sure that you fulfill all the requirements set by the lender. This will ensure that your loan application is not denied. Although eligibility criteria vary across lenders, there are some common qualifying criteria such as age of the applicant, income, credit score, employment status, and so on.

Personal Loan Customer Care

Customers may have a lot of queries while applying for personal loans. For this reason, all banks have dedicated customer service teams in place. Go to personal loan customer care and find helpline numbers for all banks.

Personal Loan Eligibility

There are a couple of factors that determine the personal loan eligibility, such as credit score, employment type and employer, income, and EMI payment history.

Personal Loan Status Check

After you apply for a personal loan with the lender, you will want to know about your personal loan application status. You will want to know whether the loan is approved, rejected, or under process. You can track your personal loan application by visiting the official website of the lender and checking the location where you can track the status of your loan application. You have to provide details, such as your full name, registered mobile number, date of birth, PAN card, loan reference or registration number if any, or any other unique number provided by the bank. You can track your loan application status offline by visiting the bank/NBFC branch, calling the personal loan customer care or Toll free number, or via net banking (if you are an existing customer).

Personal Loan EMI Calculator

Personal loan EMI calculator is used to compute the monthly EMIs that you have to pay for your loan. It is good to do this before you apply for the loan as it helps in planning your finances and determining whether you can repay your loan on time. You have to input the personal loan amount, interest rate, and tenure in months to compute the personal loan EMI.

Conclusion

Personal loans come in really handy when an individual needs money. Marriage costs, medical expenses, expenditures for home renovation, holidaying, and any kind of expenditures can be met by getting personal loans. But before applying for a personal loan, compare different lenders and choose the best. CreditMantri offers best deals and offers on personal loans.

Personal Loan FAQs

1. How do I pick the best deal for a personal loan?

The only way to determine which loan offer to apply for is to carefully research the different choices. You can judge which deal fits your financial condition and needs once you have a clear understanding of the deals and schemes available.

2. How do I apply for a personal loan?

You may apply for a personal loan in many ways. You can apply directly online on the website of the bank/ NBFC, or you can go to the branch to apply for a personal loan in person; go through websites for online comparison, or you can contact a direct sales agent. CreditMantri will instruct you on how to boost your score in the most reliable and efficient way so that your personal loan application is accepted if you want to apply for a loan and think your credit score may not be good enough. You will also be matched with the most relevant loan deals on the market for you. You will have easier and hassle-free credit access with a decent ranking.

3. Can I get a personal loan during Covid-19?

Though the Covid-19 pandemic has affected the economy adversely, personal loans rank on the top of loan products. The banks have readjusted their business model to accommodate the rising demand for personal loans during this crisis. The application process has been made completely online. Eligibility criteria like minimum income have been relaxed a bit to increase the customer base. In all, personal loan demand has risen considerably during this pandemic and banks have come up with various measures to sanction personal loans for eligible applicants.

4. How is personal loan repayment done?

Personal Loan repayments are done through monthly EMIs over the tenure of the loan. You can find the best EMI that fits your budget using a personal loan EMI calculator.

5. How can I get a 50k loan fast?

The best way to get a loan of Rs. 50,000 is by applying for a Personal Loan. They are quick and do not require any collateral.

6. What are the main documents needed for a personal loan?

The actual list of documents varies from lender to lender. You generally have to provide the following mandatory documents:

• Identity and address proofs
• Bank statement for the last 3 months
• Salary slips/income proof

7. Can I fore-close my personal loan?

Again, it depends on the lender. While some lenders allow foreclosure with pre-closure charges others require you to pay the loan as per the agreed tenure. So, make sure to check the prepayment terms and conditions while applying for the loan.

8. How long does it take for the personal loan amount to be disbursed?

Once you have submitted all the required documents and received loan sanction, expect the loan amount to be disbursed within 24 to 78 hours.

9. What is the interest rates on a personal loan?

The interest rate charged on your personal loan depends on the lender and your credit profile. Currently, the interest rates on personal loans in India start from 8.45% onwards.

10. Will my personal loan EMI change if I change my job?

No. As long as you continue to repay the EMIs on time, a change in job will not impact your personal loan repayment schedule.

11. How can I pay my personal loan EMIs?

you can use any of the following methods to pay the personal loan EMIs:

• Automatic debits from your bank account monthly (you’ll have to provide standing instructions)
• Post-dated cheques
• ECS from any other bank account to your loan account

12. Do I need a guarantor for a personal loan?

Generally, personal loans are unsecured, meaning you don’t have to provide collateral or security. However, if your credit score is low and chances of loan eligibility are poor, having a guarantor may increase your chances of securing the loan.

13. Do personal loans hurt my credit score?

All loans - irrespective of the type of loan - can cause your credit score to dip temporarily, especially at the time of application and approval. However, once you start repaying EMIs on time, a personal loan can help in building your credit score.

14. What happens if I don’t pay my personal loan in India?

Non-repayment of a personal loan is not a criminal offence i.e. you won’t go to jail. But, it can have other repercussions - like poor credit score which will make it difficult to secure other loans and credit cards in the future. The lender may contact you repeatedly to recover the cost of the loan or even may file a legal complaint against you.

15. How much personal loan can I get with a salary of Rs. 15,000?

The actual loan amount you qualify for depends on several factors like your credit score, debt-to-income ratio, other debts, etc. Your income is just one of the many factors that determine the loan amount. You can find the loan amount you’re eligible for by using a personal loan eligibility calculator, available on many sites.

16. How much personal loan can I get with a salary of Rs. 25,000?

Your income is just one of the many factors that determine the loan amount you’re granted. Other factors like your credit score, other debts, previous repayment history all play a crucial factor in deciding the loan amount you’re sanctioned. Use a personal loan eligibility calculator to determine the loan amount you can get.

17. What is the minimum income that I should need for a personal loan in India?

Personal loans are available for individuals with incomes starting from as low as Rs. 15,000 per month.

18. Can I apply for a personal loan jointly with my spouse?

Yes. Applying for a personal loan along with a co-applicant not only increases the chances of eligibility but also qualifies you for a bigger loan amount.

19. What is a personal loan EMI?

The EMI stands for Equated Monthly Installments. This is the amount you’ll have to pay every month to the lender for the entire tenure of the loan. The EMI includes both the principal and interests.

20. Why should I apply for a personal loan online?

Applying for a personal loan online has many benefits like a quick comparison of different lenders, easy online paperless application and quick disbursal.

21. What are the benefits of a personal loan?

• Quick loan payment
• No collateral or security needed
• Minimal documentation
• Flexible EMI plans and many repayment options

22. What are the minimum and maximum loan limits given for personal loans?

Generally, the minimum loan amount is Rs. 50,000 and the maximum amount is Rs 30,00,000. Higher loan amounts are based on a personal discussion that the bank may want to have with the borrower. Then he will decide about the loan amount.

23. How long can I borrow a loan for?

Though the tenure is based on the applicant’s category, the maximum is 60 months.

24. Which is one of the most important factors in choosing a loan?

Credit score is one of the most important factors in choosing a loan. A borrower’s credit score estimates the amount of risk a lender can expect from him/her. Multiple components can impact an individual’s credit score negatively, such as late payments or missing a credit card payment. Having a good credit score can help in increasing a borrower's loan amount.