Are you dreaming of owning a new car? Or perhaps you are in need of some extra money for your wedding? A personal loan is the exact solution to meet all your financial needs.
What are the major advantages of availing a Personal Loan?
- A personal loan offers you enhanced flexibility in comparison with other loans such as a vehicle loan or a home loan.
- A personal loan is an unsecured loan which means you need not provide any security or collateral to the lender or the bank. The credit history of the loan applicant (borrower of the loan) also plays a key role in getting the Personal Loan approval. If the loan applicant (borrower of the loan) hasn’t defaulted in the repayment of his previous loans and has duly paid all his bills on time, the bank will consider the loan applicant (borrower of the loan) as a low-risk borrower.
- When you avail a personal loan, there will be a set repayment period i.e. 1 year to 5 years.
- One of the best parts of availing a personal loan is that it involves a little or less paperwork. In addition, it takes on an average 48 hours in getting the personal loan approved (after the submission of the documents required for the personal loan).
- The entire process of availing a personal loan is totally hassle-free and fast.
The decision of taking a personal loan can be considered a big decision to make. Here are 6 things to be considered before applying for a personal loan:
1. Purpose of the loan:
It refers to the purpose for which you want the loan. Personal loans are for genuine requirements such as education, hospitalization or marriage. But in case you are looking to obtain the personal loan for investing in stocks for generating a higher rate of return by speculation, then it is strictly not recommended.
If you aren’t able to service your EMIs on time, there is usually a heavy penalty which is charged to the borrower. You must find out and understand the exact details with respect to the penalty which might be levied in case of default.
3. What are the rates of interest?
Since personal loans are unsecured loans, they have a high rate of interest. It is because you are not required to keep any of your assets as collateral security. It also doesn’t provide the bank any guarantee to receive the said amount back. Therefore, the nature of personal loan makes it difficult in obtaining as compared to the secured loan. You could apply for a fixed or a variable rate while choosing your loan type.
Preferably, you wish to select a loan that can fetch you the lowest possible rate of interest. So you repay the amount you borrowed instead of paying extra interest. The loan type will determine and decide the rate of interest. Normally, in a secured loan the interest rate will be lower than an unsecured loan. The Personal Loan interest rate is higher when it is compared with a secured loan.
4. What are the fees allied with a personal loan?
Every kind of a loan has a range of fees allied with it. Fees to look out for include:
- Withdrawal fees
- Servicing fee
- Insurance
- Establishment fee
- Early exit
- Early repayment
You must take your time in understanding these fees when you are deciding the type and term of your loan in order to avoid any unnecessary expenses.
5. What is the term of the loan?
The term of the loan will determine the principal as well as the amounts of interest you end up paying over the length of the personal loan. The longer the term of the personal loan, the lower the (EMIs) monthly repayments will be. Most of the personal loan ranges between 1 to 7 years.
6. How are you going to pay it off?
It’s very important to plan how you will repay the borrowed loan amount. Be honest with yourself. No one but only you could know about your repayment ability. Do a true assessment and calculation. If you think you won’t be able to service the EMIs, don’t go for the loan. Instead, talk to family and friends for arranging the required funds. Failure in servicing the EMIs would result in penalties and will spoil your CIBIL score.
Who can apply for a personal loan?
- Salaried doctors
- Salaried Employees
- Employees working with private and public limited companies
- Private and public limited companies
- Employees working in Government sector including PSUs (Public Sector Undertakings) and local and central bodies
- The minimum age to apply is 21 years
- The maximum age to apply is 60 years at the loan maturity
- A minimum net income of INR 15,000 per month is required
Documents Required to apply for a personal loan
- Application form
- Age proof (Aadhar Card, Passport, Voter card, Birth Certificate, etc.)
- Photograph
- Proof of identity (Voter card, Aadhar Card, Passport, etc.)
- Proof of income ( Income Tax returns, Recent Pay Slips)
- Recent Bank Statement
- Proof of residence (Passport, Aadhar card, Voter Card, Driving License, etc.)
- Signature Verification Proof
Out of Private Banks AXIS Bank offers the most completive interest rates on personal loans without any guarantor or security, from Rs. 50,000 up to Rs. 15,00,000 with repayment tenure ranging from 12 to 60 months and quick processing of Personal loan requiring least documentation and paperwork.
