A personal loan is an unsecured loan which is not backed by any asset that can thus be taken for any purpose right from the buying jewelry to taking a vacation or for the purpose of financing a wedding. Personal loans are thus usually the 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 we discusses the basic rules which are pertaining to 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 borrower’s repayment capacity and then the lending institutions policies. Most of the FIs give an option to the prospective customer in order 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
It is important that the borrower checks the personal loan eligibility before he actually applies for a loan, and this benefits him 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. 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 voidable hard inquiries. Online eligibility calculators are offered by almost all the lenders which can aid him in the process. Eligibility criteria thus determines that at what income and the credit score level the borrower is eligible for how much loan and for what duration.
Compare Rates and Policies
Once the borrower has checked the eligibility criteria then he needs to compare the rates at which the different FIs offer loans. Not only he needs to compare the rates, but he also has to make sure to check the other terms like loan tenure, pre-payment clause, processing charges and the turnaround time which 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. If he is looking for a loan for 60 months and the bank extends the personal loans for only 36 months then it does not make sense to apply there.
Apply for a Personal Loan
Applying for a personal loan is thus fairly simple. Generally, the FIs do not ask for too many documents and thus the processing is quite quick. The basic conditions that the borrower needs to be fulfilled in order to be eligible for a personal loan can thus pertain to the following aspects; the actual policies may thus vary from one FI to another.
- Upper and the lower age limit of the applicant.
- How long the person has been employed, overall and with the present employer.
- Minimum income per month;
This thus varies as per the city and it also depends on the fact whether a person is salaried or self-employed.
Documentation which is involved in applying for a personal loan is thus also much simpler as compared to the other loans.
Basic documents that are required include:
- Proof of Identity Proof of Address Bank statement for 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 thus needed to be submitted along with the duly signed application and the photographs to the concerned FI.
Thus getting a personal loan is quite simple; however, one is required to keep in mind that it has to be paid back in a timely and also a responsible fashion.