Personal Loan- Eligibility

There are various banks and NBFC’s which offers personal loan to all applicants fulfilling their basic eligibility criteria. Different banks have different eligibility criteria.

Most of the banks and NBFC’s have common criteria for individuals requesting a personal loan which include:

Benefits of Personal Loan

• As per the needs of the individual borrower, funds raised through a personal loan can be used freely
• Even it is helpful to overcome any financial hardships, marriage or medical related expenses, house renovation or any other financial need of the borrower without any preconditions.
• Personal loans are approved based on the income details and financial history of the borrower and not over any fixed asset as security or collateral.
• Personal loans do not require any collateral or security to be mortgaged with the bank for loan approval. They are easy to use for a vast majority of people.
• Based on the borrower’s financial history and credit report, personal loans are available for requirements as low as Rs. 10,000 to as high as Rs. 15 Lakhs or 20 lakhs, depending on the bank or NBFC concerned.
• The Tenure period ranging from 12 months to 60 months for personal loans, making it an ideal financial instrument compared to other options like credit card loan or gold loan.

Why one should go for Personal Loan?

Personal loan can be your friend at the time of financial crisis which can happen to anyone irrespective of his/her overall financial status. Personal loans are a great way to overcome any such temporary financial crisis as it allows the users to avail a loan without any pre conditions on the usage of funds. Personal loan got approved quickly in comparison to other loans. It hardly take 24-48 hours for person to obtain personal loan no matter how big the amount was.

One of the biggest advantages of personal loan that it is easily available. It has been seen that almost all the banks and financial companies offers personal loan to its customers. Reasonable rates and economical nature of personal loans is the reason behind its popularity among people.

You don’t have to go through such long process of asset verification and require minimal documentation. These loans can get quickly disbursed due to the fact that they seek minimal documentation for loan approval.

Personal loans today come with a quick loan approval mechanism and these days Loans are approved almost instantly for online personal loan requests. A loan disbursal can be expected by users requesting for a personal loan within one or two working days making the whole loan process swift and hassle free.

Top Banks Providing Personal Loans in India

HDFC Personal Loan:

HDFC Bank is a market leader in personal loans offering a Personal Accidental Cover of up to 8 Lakhs along with a Critical Illness cover of 1 Lakhs with each personal loan.  The starting of HDFC personal loan as low as 15.75% interest rate for salaried individuals. HDFC Bank complete removal of any prepayment charges after a period of 36 months. Pre-approved personal loans are offered by HDFC banks up to Rs. 3 Lakhs for women personal loan applicants along with free access to lifestyle diva products and services.

ICICI Personal Loan :

The loans offered by ICICI Bank are available for both salaried as well as self-employed individuals and professionals. Salaried individuals can get a maximum personal loan up to Rs. 15 Lakhs while self-employed individuals can get a loan up to Rs. 30 Lakhs. ICICI Personal Loan starts with as low as 13.99% interest rate.

Bajaj Finserv (Finance) Personal Loan :

Bajaj Finance Limited is a non-banking financial companies offering personal loans up to Rs. 25 Lakhs for salaried individuals. Bajaj Finserv (Finance) Personal Loan starts from as low as 16% interest rate for salaried individual and the Bajaj Finserv give allowance of prepayment up to 6 times in one year and also allows minimum amount per prepay exceeding 3 EMIs. A 24/7 customer support helpline including toll free number, emails and SMS allowing users to get in touch with the company to resolve their grievances at the earliest.

SBI Personal Loan :

State Bank of India, the largest public sector bank of the country is one of the most preferred banks when it comes to personal loans. SBI offers personal loans for both salaried and self-employed individuals. SBI or State Bank of India offers a personal loan up to 12 times the net monthly income for salaried individuals and pensioners subject to a ceiling of Rs.10 Lakhs. SBI personal loan division allowing for quick loan approval and disbursal. At lucrative interest rates you can get personal loan for various working professionals and salaried individuals from time to time.

Axis Bank Personal Loan:

Axis Bank give personal attention to each loan applicant. Personal loan amount for Axis Bank Personal Loan is highest in its class fixed at an upper limit of Rs 15 Lakhs. Axis Bank offers personal loans at a competitive interest rate ranging from 15.5 to 24% with zero prepayment charges. An eDGE loyalty points is offered by Axis banks on Personal Loans which can be redeemed for cash surplus and discounts along with multiple repayment options. A dedicated helpline for loan services available round the clock at the bank’s toll free numbers.

Why Finbucket for Personal Loan?

• Finbucket has collaborated with various public sector and private banks to offer customized personal loans for its users. Users can easily apply for personal loan online with the help of finbucket.
• Fibucket helps in calculation of loan and checks for the user’s personal loan eligibility instantly.
• Instant quotes are offered to the eligible loan applicant as per their profile and with discounted interest rates.
• Finbucket also allows users to compare the best deal by their own. Users can simply compare the loan offers of various banks at different rates and can choose by their own with which bank they want to go for.
• Feedback shared by previous successful personal loan applicants acts as a helpful tool for new applicants to get the best personal loan deal.
• An instant e-approval is generated by Fibucket as soon as the user successfully submitted his/her personal loan application
• All personal loan applications submitted with Finbucket are sent electronically to the concerned bank department assuring complete privacy and transparency.

How to apply for Personal Loan

In 4 steps you can easily apply for personal loan in no time

• Firstly, you have to fill a simple application form which will demand your basic personal information given on the site.
• We already have a coordination with 30+ banks/NBFC to get your application to them.
• Compare interest rates by your own and choose the best one for you.
• We will send you an e-approval that your loan application is accepted within 24-48 hours and amount will be credited to your account.

Keep few things in mind while applying for Personal Loan

• Interest Rates: As personal loans are unsecured, they attract a very high interest rate. This is because you need not keep any asset as collateral. This also does not give the lender any guarantee of receiving the amount back. Hence, the nature of this loan also makes it that much more difficult to obtain as compared to getting a secured loan disbursed into your account. You may either apply for a fixed rate or a variable rate when it comes to choosing the type of loan.
• Penalty Charges: In case you are not able to pay your dues on time, there is generally a very heavy penalty that is charged on your loan account. Find out the exact details regarding the penalty that may get levied in case of any such circumstance arising in the future. You want to ensure the affordability factor of the loan right from the beginning.
• Credit History: Before applying for the loan, you should check your credit score in order to know the likely prospects of getting the loan sanctioned. Most importantly, if there are any pending credit card dues, then you should immediately pay them off as this will reflect in your credit history while your application is getting processed.
• Hunt for the best deal: This refers to applying for a loan with the lowest interest rate. The lower the interest rate, lesser the cost of borrowing money from the lender. Also, check for the tenure of the loan. You should opt a loan which gives you the flexibility to pay in that manner, If you would like to pay EMI on personal loans for a longer duration.
• Need or greed? :Personal loans available for genuine needs like marriage, hospitalization or whether it is taking a personal loan for education. But if you wish to obtain the amount and invest it in stocks or commodities in order to generate a higher return by speculating, then it is highly not recommended.

Types of Personal

• Unsecured loans- Unsecured loans are the types which is issued and supported only by the borrower’s creditworthiness, rather than by any type of collateral. Generally borrowers have high credit ratings to be approved for certain unsecured loans.
• Convertible loans- A short-term loan that is typically repaid by liquidating an asset, usually inventory or receivables type of self-liquidating loan and is repaid from operating cash flow. Even the repayment schedule is made because to match up with the receipt of the anticipated income.
• Payday Loans- a relatively small amount of money lent at a high rate of interest on the agreement that it will be repaid when the borrower receives their next wages.
• Secured loans- is a loan in which the borrower pledges some asset as collateral for the loan eg- a car, or a property, which then becomes a secured debt owed to the creditor who gives the loan.
• Fixed-rate loans- A fixed interest rate loan is a loan where the interest rate doesn’t fluctuate during the fixed rate period of the loan. By this a borrower can have accurate prediction of his/her future payments. Variable rate loans, by contrast, are anchored to the prevailing discount rate.
• Variable-rate loans – A variable interest rate is an interest rate on a loan or security that fluctuates over time. It is based on an underlying benchmark interest rate or index that changes periodically.
• Installment loans- An installment loan is a loan that is repaid over time with a set number of scheduled payments; normally at least two payments are made towards the loan. May be the term of loanas little as a few months and as long as 30 years. A mortgage, for example, is a type of installment loan.
• Single-payment loans- Single-payment loans are generally denoted as secured commercial loans generally given to a business person or a company having a fixed maturity. The amount is repaid with interest in one cumulative payment.
• Personal loan balance transfer- Personal Loan Balance transfer was first started as a process of transferring your outstanding balance from one credit provider to another. In easy language, now you just have to pay your EMIs to the bank you’ve transferred your loan to, at the new and lower interest rate.
• Personal loan consolidation plans- Debt consolidation means taking out a new loan to pay off a number of liabilities and consumer debts, generally unsecured ones. Combining multiple debts into a single, larger piece of debt, usually with more favourable pay-off terms: a lower interest rate, lower monthly payment or both.

Tips for Getting Your Personal Loan Approved

You can improve your chance of having your personal loan approved by following these tips:

Always check your credit score before applying for personal loan. If you apply without knowing your credit score, there is high risk of getting rejected. Obtain credit report should be your first priority so you do not get any nasty surprise when you apply for the loan. Obtain a copy of your credit report so that you are up to date on your credit situation

Make sure that your Credit score should be 750 or above. You stand the best chance of having personal loan approved if you have a score in this range. Lenders typically look for a credit score of 750 to judge if you are loan eligible. If your score is less than 750, identify the weak areas in your credit profile and work towards improving your score.

Do not fall into the trap by applying into several banks/lenders at the same time in order to maximise your chances of being approved by atleast one lender. When you do this, potential lenders get the feeling that you are ‘hungry’ for credit and need to apply to several sources to fund your expenses.

Make sure that you have not availed personal loan in the past 6 months. In case lenders come to know that you have already availed loan just month ago, he/she will think you will not be able to take on the burden of a new debt obligation and make make additional payments.

Make sure that not more than 30% of the income goes towards EMIs. Lenders want to judge if you have enough income left over from your existing loan obligations to take on a new loan. Make sure that the EMIs from all your other loans do not exceed 30% of your income. This does not include your home loan EMI.

9 Common Reasons for Loan Rejection

Here are some of the common reasons for loans getting rejected. Although there might be many other reasons, these are major contributing factors:

• Bad Credit (CIBIL) Score
• Incomplete or incorrect information
• Bad investment profile
• Non-verification of temporary address
• Previous bad loan
• Request for change of tenure after approval of application
• Request for increase in loan amount after approval of application
• Signatures mismatch in documents and cheques
• Discrepancy in co-applicant’s information provided and documents.

7 easy steps to avoid Rejection of Personal Loan Application

You can avoid rejection of your personal loan application by following a few steps:

• Compare and choose the product best suited for your needs and means. If the bank feels you would not be able to pay for the loan you asked for, you’ll not get the loan.
• Check your eligibility for the chosen product. Do not apply for any and every loan that you might not be eligible for. Too many rejections will reflect badly on your credit history.
• Try and find out as much information as you can about the loan you are applying for, the interest rates, processing charges, repayment methods etc.
• Submit all the required documents and cooperate with the verification process. Make sure all the information provided in the application are correct and match with the corresponding documents.
• Do not agree to become a loan guarantor for anyone.
• Make sure your credit score remains good – don’t over borrow, pay your bills on time and in full, don’t miss EMI payments, pay your taxes on time, file for returns, don’t take multiple loans and use your credit cards wisely.
• Check your Credit Report at least 6 months before applying for a loan. If there’s some discrepancy, get it corrected. If the score is not good enough, take measures to make sure that the score gets past 750 for a better chance at loan approval.

How to Get a Personal Loan when you have a Bad CIBIL Score

Loans against Current Income

Despite of a bad cretit, lender can allow a personal loan in such case. But they may charge a higher personal loan interest rate. To avail a loan on this basis, borrowers need to submit proofs of income. This would include their bank statements, salary slips, and tax returns.

Add another Individual as a Joint Borrower

If your spouse or some other relative has a steady source of income and a good credit score. You could add them as joint borrower for the loan. Their credit rating is good and their income supplement yours. So, they can improve your personal loan eligibility.

Add another Individual as a Guarantor

You can add another individual as a guarantor for your loan if you don’t want to go for co-borrower. The guarantor must have a steady flow of income.

Secure a Collateral for the loan

You could these as collateral for your personal loan. Collateral reduces the risk of repayment default. When you use this option, lenders may extend you a loan despite your bad CIBIL score.

Choose your personal Loan Tenure carefully

You need to consider your interest rates and your EMI amounts when you will want to select your personal loan tenure. It is one the biggest factor while applying for a loan. Less EMI’s definitely temp you to go for longer loan tenure which will create problems in future. You also need to bear in mind that you will be paying higher interest if you go for a loan with long tenure.

You can calculate your EMIs by using a personal loan calculator which is available online. Many third-party websites and official websites of banks have an advanced EMI calculator. After computing your EMIs for different loan tenures, you will get an idea about how much you will spend each year. Accordingly, you can choose your loan tenure.

Prepayment terms should also be considered. All you have to is to enter details in the EMI calculator when you are sure that you will be prepaying your loan. Then you will get accurate results accordingly. You will most likely be asked to pay a prepayment penalty when you go ahead. If you want to prepay your loan within 1 or 2 years, you can go for a longer loan period so that your monthly payments will be lesser.

Can an individual transfer personal loan balance?

To minimize the burden of the current loan, many banks offers the personal loan transfer facility. By transfer the balance of your existing loan to a new personal loan account you can get additional finances for your other needs. The facility will help you secured a low interest rate.

• The unpaid principal amount is transfered to another account under this facility and the facility is easily accessible if you have not defaulted any of your EMIs
• Longer loan tenures and reduced interests is what you get as a benefit if you go for transfer. You may have to pay a small amount as a balance transfer fee to your lender.
• If your current lender is not offering satisfactory services then too you can go for a balance transfer.
• You should make it certain that you are going for a loan that costs lesser than your current one.
• In case, your present bank fails to meet certain conditions, then you can go for a loan transfer.
• A top-up loan facility is a additional benefit to get more funds for your other requirements
• While comparing balance transfer options, you should take into account the change in EMIs. The new financial institution may offer lower EMIs when you go for the balance transfer. However, in such cases, the interest may increase very drastically
• You should be wary about the special offers provided for loan balance transfers. Nowadays, lenders offer exclusive discounts on loan transfers. Before you go for any of these offers, make sure you read the details regarding the offer very carefully.
• You will have to make sure you collect all the documents that you had given to your present lender and give them to your new lender.
• If you are asked to give a collateral for your loan transfer, make certain that you give a collateral for a lower value than your original collateral.

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