What is a personal loan?
It is an unsecured loan that you can borrow if you're in need of urgent funds. You don't have to pledge any gold or assets to get funds through this loan. Bank will proceed with your application if you're eligible and if you have a good credit score. The interest rate is comparatively low, and you get a lot of benefits and advantages that will help you in the future.
The funds you get from a personal loan can be used for various purposes like:
Debt consolidation:- You can use the money you get from this loan to pay your current debts, loans, and credit card bills.
Home renovation:- We all need a change of scenery. So you can apply for a personal loan to get funds for home renovation.
Refinancing:- There are times when we have to take out a loan to pay off other loans. So you can use a personal loan as an ideal option to repay your current loan.
Medical Bills:- During this pandemic, the medical bills have turned more expensive. So to cover all your medical bills, you can apply for a personal loan. Getting funds by quickly applying for medical insurance will be tough.
Wedding:- Weddings are a momentous occasion in India. So if you want funds to meet your expenses during the wedding, you can apply for a personal loan.
Vacations:- We all need a break from this stressful reality. So if you're planning to go on vacation, you don't have to use your savings. You can easily apply for a personal loan facility and get funds for the same.
Miscellaneous expenses:- You don't need a big reason to apply for a personal loan. You can apply for a personal loan facility if you want to manage your other expenses or bills.
Advantages of personal loan
Personal loans are the best option if you're looking to get fund assistance. And if you're still struggling between whether or not you should apply for this loan, then we've mentioned some advantages that will encourage you to apply for a personal loan:-
Hassle-free processing:- The entire loan processing is effortless and quick. You can get your application approved within 2-5 business days. A lot of banks like ICICI Bank, Axis Bank Personal Loan, etc., Will approve your application instantly if you have a high credit score.
Unsecured:- Personal loan is an unsecured loan, so you don't have to pledge any asset as a security. Anyone can apply for this loan, and it doesn't matter if you have any assets or not.
Flexibility:- Customers can freely use the funds they get from personal loans. Banks don't monitor the end-use. However, you can use it for any illegal practices.
Credit Score:- If you're someone who has a bad/low credit score, then you can use this loan as an opportunity to improve your credit score. You'll have to repay your loan installment on time.
Documentation:- Customers don't have to worry much about the documentation process. Banks will only ask you to submit the application form along with some KYC documents and credit reports.
Eligibility for a personal loan
Each bank has different Personal Loan eligibility criteria. And banks approve individuals applications if they meet the eligibility criteria. We've mentioned some essential eligibility criteria required by the banks below:
Age:- 21 and above
Employment:- Salaried or Self-employed individuals can apply for this loan.
Minimum Income:- INR 10,000
Work experience:- Minimum 1 year with the current corporation.
Credit Score:- 750 and above
Essential factors of personal loan
Credit Scores:- It is a three-digit score between 300 to 900 that will determine the borrower's creditworthiness. So if your credit score is terrible/lesser than 750, banks will either reject your application or increase the interest rate. However, if your credit score is high, then you can get a lot of benefits and features like fast loan processing and a low interest rate. Banks don't ask for any asset as a security because it is an unsecured loan, but they still need some factor to build their trust.
Employment:- Your employed status will help you to get your loan approved. So you have to be either a salaried or self-employed individual with a minimum work experience of 1 year, to be eligible for a personal loan. Banks will reject your application if you're a student or an unemployed individual.
Income:- Your income will play a significant role to check your eligibility. You should have a minimum of INR 10,000 as your monthly income to be eligible for a personal loan. Your income will determine the loan amount that will be sanctioned by the bank. So be sure to check your income before making a decision regarding the loan amount.
The personal loan application process
You can apply for a personal loan using both online and offline modes. Firstly, you'll have to fill the application form and attach some basic KYC documents regarding your
Identity proof - like Aadhar Card, Pan Card, Passport or Driving License),
address proof - like Electricity Bill, Telephone Bill, Postpaid Bills, etc.)
Income proof - Payslip, Form 16, ITR, Tax Challan, etc.
Employment status:- Employer Certificate, Offer Letter, Certificate of Experience.
And submit it to the bank.
After you're done with the documentation process, the bank will verify your documents to check whether or not you are creditworthy.
When the bank has approved your application, the loan amount will be instantly disbursed to your bank account.
This entire process will take 2-7 business days.
Conclusion:-
There are several banks and NBFCs that provide the facility of personal loans. So you can compare all the options available in the market and choose your ideal one.
Also Read This-Is Personal Loan Good for Pensioners ?
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