There are a number of reasons to opt for personal loan. They are listed as follows:-

1. Meet any medical emergency.
2. Purchase a house or car.
3. Renovation of house.
4. To meet the requirement of child’s education.
5. Repay any previous loan.
6. To meet any heavy expenses like- family vacation.
7. To buy any expensive commodity or gadget.
8. For starting a new business venture.
9. To enhance the prevailing business.

Important Points before engaging into a Personal Loan:-

• To check for Credit score or CIBIL score.
• To do a thorough market survey on personal loan options like interest rates, charges levied on pre-payment charges and other terms and conditions.
• Plan for the needed expenditure and opt for the personal loan.
• Considering the period of repayment which can be between 1-5 years.
• To have a detailed information about APR(Annual Percentage Rate).
• Look for a low-cost processing fees, penalty for pre-payment option, lower payment delivery charges.
• To investigate the risk involved for failure of loan repayment.
• Need to compare the customized personal loan quotes from different banks offering personal loans.
• To check whether the banks are offering flat interest rate basis or reducing balance basis.
• Before signing as the guarantor, one should be fully aware of the terms and conditions of personal loan guarantor.

Features Of Personal Loan

• Loan is offered without any collateral, so the interest rate is tend to be high.
• Interest Rate is different for different customer’s depending on the salary, loan amount, loan tenure, repayment capacity and other criteria.
• It requires minimum paper work and is often approved within 48 hours of submission of the application.
• Additional fees such as late payment penalties, charges on documentation etc.

Types Of Personal Loan

1. Loan for Business Start up
2. Loan on same day.
3. Small business loans for women
4. Loans for unemployed.
5. Loans for small-scale business.
6. Loan for medical emergency.
7. Loans for marriage purposes.
8. Loan for corporate sector.

Criteria For Being Eligible For Personal Loan

Income – Should have a regular income source for a salaried individual, self-employed business individual or any kind of professional.

Age – Must be with in the norms of the lending institution.

Repayment – Should possess capability to repay the loan amount.

Credit Score – Should have a good credit history.

EMI– Should not have a burden of any existing loan liability.

Documents To Applying For Personal Loan

• Identity Proof
• Address Proof (Electricity bill, Telephone bill)
• Age Proof
• Income Certificate(salary slip for salaried individual/recent acknowledged ITR copy of self-employed individual)
• Certified license copies for self-employed people.

Personal Loan Interest Rates

Interest Rate – 10.75% onwards

Loan Amount – Rs. 1 lakh-Rs. 30 lakhs

Loan Tenure -1 year – 5 years

Processing Fees – Depends on the banks

Pre-closure Charges – 0-4% of principal outstanding loan amount

Today a growing no. of individuals is opting for Personal Loans because of its easy availability, least complication of paper work and no requirement of assets.