Sir,
As you all know that loans are very common and most used way to arrange money, we go for a loan for all type of money problems. We all need loans for business, for cars, for home, for health, e.t.c. So, this confirms that taking a loan is a most common word in the finance field, and you can say this is a modern world because today no one thinks for a minute to taking a loan but you believe it or not but before taking any type of loan you must have to read all documents and paper before taking any loan otherwise any mishappening can happen.
Today we talking about personal loans, this is a very rare loan because if you do not have any other chance then you have to take this loan, so we going to tell you about eligibility, interest, and tips for this type of loan.
The loan provided on the basis of credit history with instant approvals. Credit history means in history if you take any loan or credit card and if you pay all credit or debit of the bank on time then your credit history score is high and on the basis of that, you get a loan. The biggest positive point of the personal loan is that you get approval in just 30 min.
The most common purposes and that purposes are approved very fast and that is for vacations, home renovations, wedding, medical emergency, education, home appliances, balance transfer, e.t.c. In many cases, people use this loan to pay a fee of any other loan whose amount is very high and increasing rate is also very high, and for the wedding also.
In the case of loan default, the bank cannot recover loan dues. A credit score is badly hampered, as I said earlier that credit score is very important to get any loan and credit card but if any mishappening has happened and your personal loan is stolen or any things happen then bank not recover it and it destroys your credit score.
The size must be Rs. 50,000 to Rs. 25 Lakhs. Some bank gives up to only 15 lakhs, but the minimum amount of personal loan is always 50,000. And most people take 5 lakhs, from this loan.
The time period to give debit of this loan is for 1 to 5 years, which is depends on the amount of loan that you take from the bank.
The interest rate which you have to pay for this loan is 3 to 10%. As I said earlier that the interest rate is very high in personal loan. So, this biggest drawback in a personal loan that way it is the rarest loan if you research then you get that everyone says that take the personal loan in very rare case.
This is one system in personal loan this is another drawback in personal loan, and this is a period of 3 to 12 months in this period you not able to close the loan, means if you take a personal loan then according to an amount you have to pay interest for 3 to 12 months.
The lock-in period interest is also known as ECs or Auto Debt means in this process the amount is automatically taken by bank electronically from your account. Another way to pay this amount is through post-dated cheques, this is less preferred in these days so most banks say you to fill ECs form in place of cheques form.
For Example - If your monthly income is 60,000 and you pay 15,000 EMI. So, as you know that anyone can pay only 50% as an EMI. So, you can pay only 30,000 as an EMI, but currently, you are paying 15,000 as an EMI, then now you are able to pay 15,000 for EMI. Then your personal loan is just like that whose EMI is 15,000.
As you all know that loans are very common and most used way to arrange money, we go for a loan for all type of money problems. We all need loans for business, for cars, for home, for health, e.t.c. So, this confirms that taking a loan is a most common word in the finance field, and you can say this is a modern world because today no one thinks for a minute to taking a loan but you believe it or not but before taking any type of loan you must have to read all documents and paper before taking any loan otherwise any mishappening can happen.
Personal Loan.
Today we talking about personal loans, this is a very rare loan because if you do not have any other chance then you have to take this loan, so we going to tell you about eligibility, interest, and tips for this type of loan.
What Is Personal Loan?
Must Read.
This is a type of loan which is available in all banks, it is an unsecured loan with high interest rates. As you all know that in some loans anything is taken for a security region, for example - in gold loan gold is taken as a security, in-car loan car is taken as a security, unlike all this in personal loan nothing is taken as a security that's way this loan is known as an unsecured loan.The loan provided on the basis of credit history with instant approvals. Credit history means in history if you take any loan or credit card and if you pay all credit or debit of the bank on time then your credit history score is high and on the basis of that, you get a loan. The biggest positive point of the personal loan is that you get approval in just 30 min.
Purpose Of Personal loan.
The most common purposes and that purposes are approved very fast and that is for vacations, home renovations, wedding, medical emergency, education, home appliances, balance transfer, e.t.c. In many cases, people use this loan to pay a fee of any other loan whose amount is very high and increasing rate is also very high, and for the wedding also.
In the case of loan default, the bank cannot recover loan dues. A credit score is badly hampered, as I said earlier that credit score is very important to get any loan and credit card but if any mishappening has happened and your personal loan is stolen or any things happen then bank not recover it and it destroys your credit score.
Loan Size For Personal Loan.
The size must be Rs. 50,000 to Rs. 25 Lakhs. Some bank gives up to only 15 lakhs, but the minimum amount of personal loan is always 50,000. And most people take 5 lakhs, from this loan.
Time or Tenure For This Loan.
The time period to give debit of this loan is for 1 to 5 years, which is depends on the amount of loan that you take from the bank.
Interest Rate.
The interest rate which you have to pay for this loan is 3 to 10%. As I said earlier that the interest rate is very high in personal loan. So, this biggest drawback in a personal loan that way it is the rarest loan if you research then you get that everyone says that take the personal loan in very rare case.
Example To See Control In Personal Loan.
If we take an example that a person gets a personal loan and in that he gets Rs. 5 lakhs @ 15% p.a. for 5 years. Then EMI of that person is Rs. 11895, and you have to pay Rs 5 lakhs as a principal. So, the total payment you pay extra then principal i.e; Interest Payment is - Rs. 2,13,698. Which is half of your principal, so for 5 lakhs you have to pay more than 7 lakhs in 5 years. For that, it is important to understand the way to Debt Management.What Is Lock-In Period?
This is one system in personal loan this is another drawback in personal loan, and this is a period of 3 to 12 months in this period you not able to close the loan, means if you take a personal loan then according to an amount you have to pay interest for 3 to 12 months.
The lock-in period interest is also known as ECs or Auto Debt means in this process the amount is automatically taken by bank electronically from your account. Another way to pay this amount is through post-dated cheques, this is less preferred in these days so most banks say you to fill ECs form in place of cheques form.
Eligibility For Personal Loan.
- The first dependency for the personal loan is your income or repayment capacity. Your repayment capacity depends on annual income & other loans.
For Example - If your monthly income is 60,000 and you pay 15,000 EMI. So, as you know that anyone can pay only 50% as an EMI. So, you can pay only 30,000 as an EMI, but currently, you are paying 15,000 as an EMI, then now you are able to pay 15,000 for EMI. Then your personal loan is just like that whose EMI is 15,000.
- The second eligibility is that your income must be 15,000 p.m. in some bank this minimum amount will be 20,000 so the minimum income value is change according to banks.
- Customer profile:-- means your salary type ( as given below)
1. A personal loan depends on your profession means you are Salaried, self-employed, professional, business.
2. Occupation & Income Stability.
In case of salaried personal loan is approved very fast, but in case of professional and business approved according to the fluctuation in business, if your business or profession is suffering from more high and low then according to your minimum income you get a loan.
- Another eligibility is your age means your minimum age is must be 21 to 60 years ( salaried), 25 to 65 ( for professional, businessman).
- In profession & business - Min 3 yrs, in business, means you must have 3-year business experience if you are from the field of business and profession.
- In all unsecured loan credit score, is the most important factor, so your credit score must be 750+.
Additional Charges.
With interest, there are some charges which you have to pay with principal amount and that is -
1. Processing Fee: 1 to 2% of loan amount is the processing fee.
2. Pre-Payment & Foreclosure Charges: This is the charges by banks when you do a pre-payment if you get money, so if you pay all amount before completing time then bank put this type of charge.
1. Floating Interest Rate.
(i) Nill, in case of payment from own funds. But 2-3% charge of an outstanding loan amount, in case of loan transfer from another bank.
2. Fixed Interest Rate.
(i) 2-3% of the outstanding loan amount.
Documents For Personal Loan.
1. Application form with photograph duly signed. - you get a form from the bank.
2. Identity, Residence and Age proof.
3. Last 6 months bank statements.
4. Last 3 months salary-slips. - for salaried only.
5. Processing fee cheque.
6. Form 16/Income Tax Returns.
7. Proof of business existence. - for only self-employed and non-professional.
8. Business Profile. - only for self-employed.
9. Education Qualification certificates and proofs - not for salaried, accept salaried all.
10. Last 3 years CA Certified / Audited Balance Sheet and profit & loss account - Only for self-employed and non- professional.
The document is common for all type of loan, so it is important to remember this all documents because of it all needs in almost all type of loans.
Pros & Cons and Some Tips For Personal Loans.
pros of Personal loans -
(i) Minimum Documentation and Hassies.
(ii) Instant Approved.
Cons of Personal loans -
(i) Expensive loan - high-interest rates.
(ii) High variation in interest rate - means if you do not have a good credit score or any other default as delay in payment of any EMIs then the interest rate is very high for you.
Some Tips -
(i) Compare interest rates of various banks and negotiate for the lowest rate, you can negotiate through online.
(ii) Explore cheaper loan first - Home loan, LAP, Top Up Loan. Always try to use all these loans in place of personal loan first if not possible then only try for a personal loan.
(iii) Go for the personal loan for:
Smaller Amount - which 2 to 5 lakhs.
Short time period - which is 2 to 3 years.
urgent requirements when other loans are not immediately possible.
paying higher cost debt like a credit card.
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