After the pandemic, many people lost their job whereas new opportunities have knocked on the...
Personal loans are the most popular and famous types of loans available in the market. They are easy to get as you need not have promise any of your assets. You can take a personal loan for any purpose like an expense for traveling around the world, home renovation done, or planning a perfect wedding. Moreover, it is your financial buddy during a financial crisis. Now, the main question comes, what all things you need to keep in mind & how to apply for a personal loan either offline or online. Take a sneak peek into the short guide and get a personal loan at the lowest interest rate possible.
Crucial Points to Consider While Applying for Personal Loan
1. Check Eligibility Criteria
The eligibility criteria vary for each lender and it also differs for a self-employed vs salaried individual. People between 21 to 65 years can take up a personal loan.
Your minimum net monthly salary should fall between Rs. 15,000 to Rs. 30,000 per month. With a minimum working experience of one or two years in your current job, you can borrow money from a lender.
Apart from this, your credit score must be as high as possible (760+). This increases the chances of getting charged with the lowest interest rate.
2. Amount You’re Comfortable With
One must always go with the amount that is required or necessary. For this, you need to reflect on the purpose behind taking a loan.
This point is important because your monthly installment (EMI) will be dependent on it. Avoid taking a loan just because it comes with minimal documentation or are pre-approved.
3. Settle for Lowest Interest Rate
Personal loans are generally offered at a higher interest rate (of the order of 9-24%). Before applying, do check the interest rate presented by various lenders in both public and private sector banks.
Opt for a shorter loan duration as the total interest payment comes out to be lower. The only drawback is, you need to pay high EMI.
4. Compare Various Personal Loan Products
Comparing different personal loan products based on penalty charges, interest rate, processing fees, pre-closure charges.
Go with the product that offers you the liberty to repay the Equated Monthly Installment. Moreover, pre-close the personal loan before penalty charges incur.
Documents Required to Apply for a Personal Loan
You need the following documents while applying for a personal loan,
- PAN Card
- Identity Proof (Voter ID, Driving License, Aadhaar Card, Passport)
- Signature Proof (PAN Card, Passport, etc)
- Address Proof (Utility Bill, Rent Agreement, Passport copy, Voter ID, etc)
- Past 6 months Bank statements
- For the salaried individual, salary slips of the last 3 months & income tax return or form 16 are required
- For a self-employed individual, balance sheet of last 2 years, Income tax returns of last 2 years, business proof, IT Assessment, Income Tax challans are required
How to Apply for a Personal Loan?
Before applying, make sure you meet the basic eligibility criteria to borrow the desired loan amount. Now, you can follow the steps,
Step 1: Choose the bank from where you want to take the loan, Download and fill up the loan application form with your personal as well as financial details
Step 2: Pick the desired loan amount & a loan tenor
Step 3: Provide all the essential documents along with the form for future verification
Step 4: Wait until your form undergoes review. After loan approval, the personal loan gets disbursed in your account
Along with personal loan interest, you also need to pay charges and fees like processing fees, late payment charges, and foreclosure charges or prepayment charges. Get knowledge about the fee structure before you take the loan.