Personal loans are an unsecured type of finance that is commonly used to address short-term needs and can be used for any purpose. A personal loan is a good option for unexpected emergencies but it does come with a few risks like any other loan. So read further to know more about eligibility, interest rate and how to get a personal loan.
Eligibility for a personal loan
Anyone can apply for a personal loan in any bank or financial institution as long as they qualify for the basic eligibility criteria. A few basic criteria are mentioned below:
- The applicant must be a resident of India.
- They should be at least 21 years at the time of application and a maximum of 65 years at the time of loan maturity.
- They should be salaried individuals or self-employed.
- Monthly income varies from one lender to another. It should be at least Rs 15000 per month.
- The individual must have at least 1year of work experience and a minimum of 6 months with the current employer.
- For a self-employed individual, the business must have at least 3 years of continuity.
- The individual must have a credit score of 750 or above.
Documents required to get a personal loan
The following documents are required for a personal loan:
Identity proof: PAN card, Voter ID card, Aadhar card, Passport, or DL are all acceptable forms of identification (Driving licence).
Address proof: A utility bill, a phone bill, a ration card, a driver’s licence, a passport, a voter ID card, or a bank statement from the last two months.
Income proof: Form 16, most recent salary slips, most recent three-month bank statement confirming salary credits, salary certificate, or income tax return documentation for the previous three years. In the case of self-employed you also need to provide CA Certified / Audited Balance Sheet and Profit & Loss Account for the previous three years.
Age proof: PAN card, Passport, Driving licence, Birth certificate, or School or college leaving certificate are all acceptable forms of evidence of age.
To avoid last-minute issues while applying for a loan, you should always be prepared with the above-mentioned documents. Contact your lender in case you need more information about eligibility or the documents required.
How to get a personal loan?
After you have confirmed your eligibility and collected all the documents required, it’s time to apply for a personal loan. You can apply for a personal loan in both online and offline mode.
How to get a personal loan online?
Follow the steps mentioned below to apply for a personal loan online:
Step 1: Choose the right lender.
Please keep the following considerations in mind when selecting a lender:
- Interest rate offered
- The loan amount
- Repayment period
- EMI that the lender would ask
- Other charges
Step 2: Complete the eligibility form.
The next step is for the consumer to visit the lender’s site and complete the eligibility form.
Step 3: Choose the loan amount and tenure based on your eligibility.
After filling out the eligibility form the next step is select the loan amount and tenure based on your eligibility.
Step 4: Apply for a loan.
After providing further information like your personal and banking information apply along with the required documents. Your lender will cross-check the information provided and approve the application if everything is in order. After approval, the loan will be disbursed by the lender within a stipulated time.
How to get a personal loan in offline mode?
The following are the processes for applying for a personal loan in offline mode.
- Find a lender or bank that you want to approach for a personal loan.
- Contact the loan manager or customer relationship manager to discuss your options and the eligible amount and tenure for you.
- Give the bank or lender all of the necessary information and documentation.
- Your application is completed and accepted when the bank verifies all of the information you submitted.
Factors that affect the interest rate on personal loan
Before you apply for a personal loan, you should compare the interest rates offered by several institutions, which range from 7.90% p.a. to 49% p.a. While the interest rate is decided by the lender or the bank many factors might affect interest rate on personal loan:
Income: loan providers consider the income of the applicant while deciding the interest rate. Higher-income lower the interest rate.
Employment details: The interest may also depend on the type of employment and the duration you have been working for the employer.
Age: The applicant’s age might also influence the interest rate on personal loan given by the loan provider. Individuals approaching retirement age may face a higher interest rate.
Relationship with the Loan Provider: Existing bank clients who have a good relationship with the loan provider may be offered a cheaper rate of interest when applying for a personal loan. However, this depends on the discretion of the bank.
Applying for a personal loan is quite easy if you know how to get personal, the process involved and the documents required beforehand. Always look for a lender that provides you with the best interest rates on personal loan and offer other attractive discounts. In case you have any queries regarding the loan process contact your lender to guide you through it.