A personal loan is an unsecured loan that is not backed by any asset that can thus be taken for any purpose right from buying jewelry to taking a vacation or to finance a wedding. Personal loans are usually short-term borrowing which is ranging from 12 to 60 months and it depends on the borrower’s needs and the lender’s policies.
The article below discusses the basic rules which are about how to get a personal loan, a little variation may, however, occur as per the financial institution’s (FI) policies.
- Just like duration, there is also flexibility about the amount of the loan too which thus depends on the borrower’s repayment capacity and then the lending institutions’ policies.
- Most of the financial institutions give an option to the prospective customer to apply for a personal loan either online or offline.
- Even if the borrower chooses to apply online the bank would send a representative or the applicant would have to approach a branch to complete the necessary documentation and then sign the requisite papers.
If the borrower is looking at applying for a personal loan he is required to keep in mind the following aspects:
Check the Personal Loan Eligibility Criteria Before Applying
- The borrower must check the personal loan eligibility before he actually applies for a loan, and this will give benefits in various ways.
- First, he is saved from losing the processing fee that he pays when they are applying for a loan which is thus not refunded even if the application is rejected. Before applying for a personal loan check the personal loan details.
- Second, he is not required to end up losing time in repeating the process in case of rejection of the loan application, and the credit score is thus not negatively impacted because of the avoidable hard inquiries.
- Online eligibility calculators are offered by almost all the lenders which can aid him in the process.
- Eligibility criteria thus determine that at what income and the credit score level the borrower is eligible for how much loan and what duration.
Compare Rates and Policies
- Once the borrower has checked the eligibility criteria then needs to compare the rates at which the different Financial institution offer loans.
- Not only compare the rates but also has made sure to check the other terms like
- Loan tenure
- Pre-payment clause
- Processing charges, and
- The turnaround time is taken to process the loan.
- Based on a comparison that considers all these aspects borrower should thus shortlist the financial institution that matches his requirements.
Apply for a Personal Loan
- Apply for a personal loan is fairly simple. Generally, the Financial institution does not ask for too many documents and the process is quite quick.
- The basic conditions that the borrower needs to be fulfilled to be eligible for a personal loan. Can pertain to the following aspects, the actual policies may thus vary from one Financial institution to another.
- Upper and the lower age limit of the applicant.
- How long the person has been employed, overall, and with the present employer.
- The minimum income per month;
This varies as per the city and depends on the fact whether a person is salaried or self-employed.
Documents required for a personal loan
Basic documents that are required include
- Proof of Identity Proof of Address Bank statement for the last3/6 months.
- The Latest salary slip and latest form 16.
- The Proof of continuity of the business for self-employed.
The above documents are needed to be submitted along with
- The duly signed application, and
- The photographs to the concerned Financial institution.
Getting a personal loan is quite simple. However, one is required to keep in mind that it has to be paid back on time.