What is Personal Loan? - Everything about Personal Loan
February 12, 2020
Today, an increasing number of people are applying for Personal Loans to meet their larger expenses. One of the reasons for the significant rise in the growing popularity of Personal Loan is that being an unsecured loan, it does not require any collateral and the processing time is quick. You can easily avail of a Personal Loan from any bank or a non-banking financial company of your choice. With the advent of the online services offered by the financial institutions, you can get the money within 48 hours.
What is Personal Loan?
Personal Loan is an unsecured credit provided by financial institutions based on criteria like employment history, repayment capacity, income level, profession and credit history. Personal Loan, which is also known as a consumer loan is a multi-purpose loan, which you can use to meet any of your immediate needs.
What are the benefits of availing of a Personal Loan?
- Unlike other types of loans like Home Loan or Gold Loan, where you must provide several documents, Personal Loans require minimum documents and the approval process is quick.
- With various financial institutions offering Personal Loan online services, the loan amount is disbursement within a few hours provided the lender is convinced of your repayment capacity.
- Another significant feature of Personal Loan is that the lenders offer you the flexibility to choose your loan tenure. Usually, Personal Loan tenure ranges from one to five years. So, you can select the loan term based on your repayment capacity. You should opt for a shorter loan, so that you can save on the interest payment and repay the amount faster.
What is the maximum amount that you can borrow?
The maximum amount that you can avail depends on your income level, your profession and the lender’s assessment of your loan application. Generally, the lenders sanction the loan based on their calculation, so that the EMI is not more than 40% - 50% of your monthly income. Also, the lenders consider if you have any dues while calculating the loan amount.
If you are a business owner or self-employed, the lender will determine the loan amount based on the profits earned and recorded in the profit and loss statement. If you are a salaried professional, the lender will determine the amount based on your salary and other liabilities.
Is it possible to apply for a joint Personal Loan?
Yes, you can apply for a Personal Loan jointly with your spouse, or any other family members like parents or siblings. One of the benefits of applying for a Personal Loan with a co-borrower is that the lenders will consider both the applicants’ income while determining the loan amount. This means that you can apply for a higher loan. However, you must know that if the co-borrower has a poor credit history, there is a risk that the lender might reject your loan application.
What are the documents required for Personal Loan application?
Although the documentation varies from lender to lender, some of the essential documents you must provide along with your application form include:
- Proof of income (salary slip, bank account statement, ITR forms)
- Proof of residence and identity proof
- Certified copy of your degrees and licence (this is applicable only for self-employed applicants).
Are there any foreclosure charges?
If you decide to prepay the loan before the end of the actual term, the lender may levy penalty charges known as foreclosure fees. This penalty usually ranges from one to two percent of the outstanding amount.
Now that you know about Personal Loans, you can compare the loan offers from different lenders and apply for a Personal Loan online, and get the amount you need to meet your expenses.
Apply for Personal Loans online to fulfil your financial needs.
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