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A personal loan is your best bet when there is an immediate need for funds. A personal loan can be availed for debt consolidation, paying medical bills, redecorating your house, starting a new business venture, funding your travel plans or any other personal purpose.
With so many personal loan providers in the market promising quick processing and instant disbursal , an applicant is indeed spoilt for choice. Online application for a personal loan has further simplified the process. Now you can avail an instant personal loan online, through the comforts of your home.
While applying for a personal loan is a piece of cake, there are certain important things that need to be taken into consideration before processing your loan request. Below discussed is a personal loan checklist that can help you choose the right personal loan:
- Eligibility Criteria
- Documents Required
- Interest Rates
- Loan Repayment Tenure
- Equated Monthly Installment
- Fees and Charges
- Repayment Options
1. Eligibility
All banks and NBFCs (Non-Banking Financial Companies) have certain eligibility criteria that need to be full-filled for availing a personal loan. For instance, in order to apply for the Bajaj Finserv Personal Loan, following is the basic eligibility criteria:
- The applicant must an Indian citizen
- The applicant must be within an age-group of 23-58 years (for salaried individuals) or 26-66 years (for self-employed individuals)
- The minimum take home salary threshold for salaried individuals must be within the range of INR 27,000 – INR 37,000 (depending on whether they are residing in Tier I or Tier II cities in India)
- For self-employed individuals, a minimum 3 years of business vintage is a must.
The eligibility criteria may slightly vary for different personal loan providers. However, the basics remain the same. Make sure that you check your eligibility before you approach any loan provider.
2. Documents
To ensure smooth processing of your personal loan request, you need to submit certain KYC (Know Your Customer) documents. However, the list is not extensive. All you need to do is submit an-
- Identity Proof: Aadhar Card, Voter ID Card, PAN Card, etc.
- Address Proof: Ration Card, Passport, Driver’s License, Electricity bill, etc.
- Income Proof: Bank Passbook, Salary slips for the last 3 months., Tax invoice, etc.
Make sure you have your original as well as attested Xerox copies of these key documents ready at the time of approaching a bank or NBFC for a personal loan.
3. Interest Rates
The interest rate at which a personal loan is taken is crucial in determining the total amount of EMI (Equated Monthly Installment) to be paid. Most personal loan providers have certain fixed interest rates at which they offer their personal loan. However, the following factors also play an important role in deciding the interest rate for granting a personal loan:
- Applicant’s eligibility
- The total amount to be borrowed
- Applicant’s current financial status
- Applicant’s professional/ business experience
- Applicant’s risk profile
Most leading personal loan providers have active websites that advertise the interest rates at which they offer their personal loan. Make sure that you compare the interest rates offered online and check what best suits your financial requirement.
4. Loan Tenure
The loan tenure is an important factor that needs to be taken into consideration while availing a personal loan. The length of a personal loan tenure may be decided based on factors such as the applicant’s monthly income, the total amount to be loaned, interest rates applicable, etc. Normally, the tenure for repaying a personal loan lasts between 12-60 months. However, there are certain long-term personal loans that can be easily availed. These loans typically have a tenure of 5 years and above.
5. Equated Monthly Installment
An Equated Monthly Installment (EMI) is an amount that is deducted every month from your account for your personal loan repayment. This EMI is based on the rate of interest at which you have taken your loan and your total loan tenure. Most leading loan providers have tools like EMI calculators or Eligibility Calculators on their website. You can go online and estimate the tentative EMI to be paid for your personal loan by using these online calculators.
6. Other Charges
While availing a personal loan, there are certain charges involved that might not necessarily be displayed on the websites of the personal loan providers. These may involve processing fees, loan origination fees, pre-payment charges, balance transfer charges, etc. While loan processing fees and origination fees may involve nominal charges, other features such as pre-payment charges or balance transfer charges may sway on the higher side. What exactly are these charges? Let us discuss:
- Pre-payment charges: Prepayment of loan involves the full or partial repayment of the outstanding loan amount by the borrower, before the end of the loan tenure. Certain banks and NBFCs levy penalty when you prepay a personal loan. Make sure that you have a clear idea about the prepayment clauses in your personal loan contract before signing on the dotted line.
- Balance transfer fees: The balance transfer facility for a personal loan allows the applicant to transfer the outstanding personal loan balance amount from one personal loan provider to another. However, some personal loan providers charge certain fees for initiating a balance transfer.
7. Repayment Options
It is important that you contemplate your repayment options before applying for a loan. Do not go overboard to avail a personal loan that exceeds your financial needs. Try to avoid any unforeseen circumstances that might lead to defaulting on your personal loan. Ensure that your personal loan provider offers flexible repayment options such as loan refinancing, prepayments, part-payments, lump-sum settlements, extended grace periods, asset liquidity, etc., as a means of possible loan settlement.
Before making a final call on applying for a personal loan, ensure that you thoroughly go through the above-mentioned checklist. To further explore your personal loan options, visit Finserv Markets today!
Finserv Markets, from the house of Bajaj Finserv is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment and exclusive EMI store, all under one roof- anytime, anywhere!
