Personal Loan to Meet Immediate Requirement

All you need to know about Personal Loan

Banks and financial institutes give loans and advance for meeting your immediate requirement such as buying home appliances, Computer or Laptop, Holiday trip, marriage and so on. Personal loan is available for any person who is satisfies the criteria defined by financial institutes.

What is Personal Loan?
Personal loan is short term loan or advance available from banks or any financial institution to private individual without any collateral security based on their income, credit history and ability to repay. Personal loan amount can be any amount between Rs 10,000/- to Rs 15 lakhs for the period of one year or less than five years.

Why do you need Personal Loan?

The need for personal loan varies from person to person depending on their lifestyle and requirement. Personal loan is applied by an individual to meet his personal requirement such as desire to owe a home appliance, holiday trip, pay off credit card debts, buying laptop, marriage of his daughter or any relatives and so on.

Advantages of Personal Loan:

Personal loan is available for any person who meets the criteria defined by banks and financial institution. It requires no guarantor, security and collateral. Once you are qualified for loan, it will take only 24 hrs and some financial institutes require 7 working days to disburse the amount. You can extend tenure period for reducing monthly EMI. There is no penalty or charges for pay off loan before tenure period.

One of the advantage of personal loan is it requires less paper work and it is an easy source of money when you require money to meet an immediate requirement. Personal loans are very helpful for self employed individuals as they require fund in urgent for short duration other than their bank overdraft.

Eligibility of personal loan:

Eligibility criteria vary for each bank and some bank provides personal loans only to the existing customer who has account for more than six months. Other criteria are as follows:

• Government employee, salaried person, self employed businessman or professional.

• Age of 18 yrs and above.

• Individual is employed or in business for more than one year.

• Good credit history or capacity to repay the loan and its interest.

Documents required:

Personal loan is easy to apply and requires no collateral securities. It requires less document comparing to other loans. The important documents required are following.

• Proof of identity, it can be copy of your driving license, passport, employee id, Voters id or Ration card. Proof can be any one of them.

• Address proof which proves your residential address. It can be letter from your employer, copy of rental agreement or your ration card.

• Last three months bank statement and salary slip.

• Proof of your continuity in job. Either Form16 or copy of appointment letter.

• Proof of your educational qualification, copy of your SSLC and highest degree.

Repayment Options:

There are number of options which enables borrower to repay the amount without making any defaults. Banks or financial institutes grant loans depending on your credit history, ability to repay and monthly income. Repayment option varies depending on the amount you borrow and affordable EMI for a month.

Bank charges interest for personal loan granted to you. Bank offers primarily three type of interest rate.
• Fixed rate
• Floating interest rate
• Flat rate

Flat rates are considered most expensive when comparing to other interest rates. Choose loan where interest rate is calculated on the reducing balance. Banks has various band rates. Find out which band rate you fall under and negotiate to get lowest interest rate. Remember making prompt payment provides you good credit history and loan is easily available in future.

Repayment option adopted by some bank is simple and easy for borrowers. When borrowers apply for loan bank asks to submit all post dated cheques which are EMI for each month and these cheques are presented for collection on 1st of each month. You can deposit EMI in your account which will be transferred to your personal loan re-payment. This is one of the best options to repay your personal loan.

How to best utilize personal loan:

Personal loan is easily available and amount is sanctioned on your ability to repay. You can utilize personal loan to pay off debt which accumulated from credit card. Credit card companies charge high interest rate compare to personal loan. You can consolidate your debt and pay off with personal loan. Personal loan is very helpful to meet unexpected medical bills. It is important to know the terms and interest rate of personal loan before you apply. Plan well and utilize your personal loan wisely.

Things to take care when applying for Personal loan:

Do not apply for personal loan if you can afford or meet your requirement without them. Make a research in market on available offers and interest rate. Contact one or more banks to know the lowest rate of interest. Ask for loan which has zero processing charge or no penalty for pre-payment of loan. If no penalty loan is unavailable, apply for lowest cost. Do not leave anything to executive to fill up and do not sign any blank document. Make sure all offers agreed are supported in written. Choose EMI which can be affordable.

Important banks offering Personal Loan:

Citibank Personal Loan
HDFC Bank
Barclays Finance
State Bank of India
ICICI Bank
HSBC Bank
ING VYSYA Bank
Deutsche Bank
Kotak Mahindra Bank
Reliance Consumer Finance
Axis Bank
ABN AMRO Bank

Frequently Asked Question:

1. What is Personal Loan?
2. Why do you need Personal Loan?
3. What are advantages of Personal Loan?
4. What all documents are required for personal loan?
5. What are different interest rates for personal loans?