With the rise in inflation, people around the world often fall into financial difficulties. But thanks to loans offered by banks, they help people to fulfil their dreams without worrying about financial burdens. For meeting immediate needs, personal loans are the best option to look for.
Before applying for a personal loan, you must click various boxes to check eligibility. This blog will explain personal loans, their purpose, and their requirements.
Personal loans are efficient due to quick approval most times. The most popular and convenient loan is unsecured because it requires no collateral. Any bank or non-bank can provide personal loans.
Technology simplifies personal loan applications. Personal loans require less documentation and are relatively easy to get.
Thanks to the Internet and online banking, you may get personal loans, interest rates, and other information from home with a few clicks. You may compare them too!
Unsecured personal loans rose 24% annually, according to the Reserve Bank of India’s April 2023 report. Personal unsecured loans are popular because they benefit borrowers. Here are some ways you might benefit from personal loans.
Benefits of a Personal Loan
Here are some key personal loan benefits:
Personal loans are unsecured loans, as there’s no need to pledge any collateral when applying for personal loans.
Now, there’s no need to wait long hours in the bank and go through loads of paperwork. Internet banking and mobile applications have made the entire process quick and hassle-free. Applying for personal loans was never this easy!
Say goodbye to lengthy documentation procedures. With the mobile banking facility, applying for personal loans has become a piece of cake. You can either opt for a virtual application or visit the nearest branch. With minimal documents, you can easily apply and get your loan application passed.
One of the best features of a personal loan is that you can obtain the loan amount within 24-48 hours. This is most beneficial in case of emergencies when you need funds instantly. Many banks offer their existing clients personal loans with instant disbursals if they have a good credit profile with an impeccable repayment history.
Flexible Repayment Terms
For repayment of the loan amount, one can choose monthly instalments over a 12-84-month period.
Personal Loan Eligibility
Personal loan eligibility criteria vary, so it’s essential to check the preferred financial institution’s website before applying for a personal loan. However, there are certain basic eligibility criteria that one must comply with to get personal loans.
- Age: Banks and financial institutions provide personal loans to individuals between the ages of 20 to 70 years. Some banks even offer personal loans to individuals 18 years of age.
- Credit Score: When it comes to personal loans, credit scores play an important role. The credit score ideallyshould be 750 or above. However, it may vary. Make sure to examine the bank’s loan eligibility conditions and minimum credit score before applying.
- Employment Status: Personal loan applicants should be salaried or self-employed. Banks prefer sanctioning loans to them as they are more likely to get a guaranteed monthly paycheck.
- Income: Finally, income is an essential criterion the lending institutions consider while offering personal loans. Although the minimum amount varies by bank, a good salary ensures that you will return the loan. The monthly minimum wage should be approximately Rs 15,000.
- Work Experience: Salaried staff need 1-2 years of experience. Ideally, one should work at the same company for 6–12 months. Self-employed people must have been in business for at least 2 years.
Things You Must Remember While Applying for Personal Loan
Good Credit History
A credit score or the CIBIL score is based on your history of credit repayment. A Good credit score ranges from 300-900. But, if your credit score is low, it signifies bad debt management, which may hamper your loan application. Pay dues on time to keep a good credit score by paying dues on time. Cut off all old credit cards that you no longer need. Also, remember to not exceed more than 30% of credit utilisation.
Compare Interest Rates
When applying for personal loans, it is essential to compare the interest rates offered by various lending organisations. Choose the one that offers the ideal amount with the lowest interest rate.
You can use a personal loan interest rate calculator online if you don’t know how. Various personal loan interest rate calculators let you choose loan amounts, rates, and types of interest. This step makes the repayment of EMI on your loan easier.
Assess All Costs
Before applying for a loan, pay any processing, prepayment, or late payment costs to the bank or lender. It will improve your financial management.
Choose the Right Loan Amount
Personal loans should only be applied for as much as needed. Better evaluate all your demands and requirements. Maintain a goal like buying a car or financing a wedding.
Remember to consider repayment time and affordability. Take caution with this critical step. First-time personal loan applicants should consult an expert.