PERSONAL LOAN FAQ
In Personal Loan, you no need to submit any collateral, like we have to do in case of Home loan or car loan. In that the submitted asset is mortgaged with the lender. It’s a unsecured loan, even you don’t need the guarantor for applying this loan. Compared to other Loans, this loans have some special benefits like fast processing, minimum documentation, etc. Also you can apply for this loan for any of our personal needs.
Any salaried or self-employed or any candidate with regular source of income can avail of personal loans ranging from Rs.75,000 to Rs.15,00,000 it depends on candidates eligibility, relationship with banks and repayment capacity.
Irrespective of your source of income whether you’re individual, salaried, self-employed, professional or business you must have a regular source of income. The company in which you’re employed with is also affected for taking personal loan, his/her relation with bank, residential location and other factors. Personal loan some basic requirements are same for any bank but if you’re looking for some specified bank then you can find some little extra requirements from bank to bank.
In every bank there is some margin for providing a minimum amount as a personal loan. It varies from bank to bank. However, most lenders have set their minimum personal loan amount of Rs. 30,000.
Generally the personal loan tenure is in between 1 year to 5 years. However, in some cases, it may vary based on some special cases of borrowers.
Yes, it’s possible to apply for Personal loan either by individual or with co-applicant jointly. But, the co-applicant must be from a family members like parents or spouse. Jointly borrowed loan will have the high possibility of getting loan in large amount. However, you have to keep in mind that both of the applicant must have the good credit history, otherwise it may effect your loan adversely.
Loan Approval is solely dependent on the Loan sanctioning officer, whose decision is purely depended on the mechanism specified by the Bank /financial institution. Loan approval process can take up to 48 hours to weeks’ time. Once you have submitted the document and verification process complete, the loan will be disbursed within 7 working days by the bank. If it’s sanctioned. If you want to get the loan as soon as possible, make sure that all documents must be ready along with the signed electronic clearing system form and post-dated checks.
The documents requirements are varies from banks to banks and financial institutions. But some of the documents requirements are common for every banks /financial institution who provide loans which include: Address Proof Documents Source of Income Proof( irrespective of applicant profession) Identity prof documents Certification copies of License/Degree (for self-employed professional) and others requirements as per the lenders demand.
Whenever you are looking for taking a loan, you first compare the offers of individual banks and decide bank/financial institution to go for. Make use of online tools like personal loan EMI calculator and loan eligibility calculator, it will help you with list of options available for you based on your eligibility criteria with that specified bank/financial institutions. Select the best option, which suits your needs. While selection you must check for the some of the key factors like interest rates, processing fees, tenure, and others.
The Loan amount can be repaid in the form of EMI( Equated Monthly Instalment) via post-dated cheques drawn in favour of the bank or by submitting a required allowing payment through the ECS(Electronic Clearing Services) system.
Loan approval for any candidates is primarily based on their credit score and source of income or income level. Credit score plays a major role in sanctioning a loan. If you have good credit history then the possibility of getting high amount of loans is there and if you have a poor credit history then you may get or may not get the loan, even if you get loan, they sanctioned less amount of loan. Credit history is nothing but your repayment capacity with loans you have taken form any banks/financial institutions. Credit score with 900 or closer to will get the high amount of loan, which shows that you have paid the loans timely.
With your EMI, the repayment tenure will increase that leads to more rate of interest you need to pay it to the lender. So, you can check with online tools available like EMI calculator that will help you to get the best possible option for you to opt for loan from any banks/financial institutions.
In addition to rate of interest on principle amount, there is an additional non-refundable amount/charge that you need to pay when applying for a personal loan. 1%-2% of loan principle have to pay it to the lender for documentation and application process. This charge may be waived by lender, in case of long term agreement or relation with the lender.
It’s borrower choice to select the type of interest rates at the time of applying for a loan. In case of floating rate of interest the EMI amount will keep on reducing as it leads to the reducing balance method of generating interest pay-out. Whereas for fixed rate of interest, you have to pay the exact amount for whole tenure of loan. In case of floating rate, the rate of interest rate varied by the bank on a half yearly or yearly basis as per the new rules of MCLR.
In reducing balance interest rates, the borrowers have to pay the interest for only on the outstanding loan balance. While, in case of flat interest rate the borrower has to pay the interest for the complete loan balance throughout the loan term. Because of that the interest payable doesn’t decrease even as the borrower makes the EMI pay.
It’s an extra discount provides to the particular applicants by the bank/financial institutions, if they have any pre-existing relationship with the lender. Which includes having an account with the bank either salary /saving or having an existing credit card, loan or fixed deposit with the prospective lender. Relationships discounts may get you in the form of- lower interest rates, waiver of the processing fees or others, when you apply for the loans.
No it doesn’t have any tax benefits, but in case of personal loans for home renovations/down payment. In this case, you are eligible for income tax deduction. Also this tax benefits is only for the interest on the loan and not the principle amount. For getting benefited, you need to submit the proper receipts to claim deduction.
What’s the difference between Pre-payment, part-payment and Pre-closure? Are there any changes concerned to this?
Pre-Payment: This happens when you pay off your loan in to some extent before it becomes dues as per the Emi schedule. Pre-payment may be or not equal to the total due amount. Prepayment charges generally ranges from 25 to 5% of outstanding loan amount. Also, some banks not allow the borrowers to pay this amount before some of the EMI payments is not completed. Part Payment: A part payment amount is less than the full amount of principle and this amount is paid before the loan amount becomes due. Pre-closure: Pre-closure is completely paying off a personal loan before the loan period/tenure has completed. It’s charges may range from 2%to 5% of the loan amount.
Credit card loan is the loan you can avail against your credit card. And you can apply for credit card with your specified credit card issuer, you don’t have any option other than this. But in case of personal loans you can opt for loans from any credit issuers. For getting personal loans you need documentation to be submit the lender. But, in case of credit card loan the lender already have all your documents so you no need for submitting your documents for getting loan against credit card.