The personal loan can be availed for multiple purposes like marriage purpose, house renovation purpose, to pay medical bills, for the travel purpose.ETC. Personal loans are best suited for people with moderate or else low income. The borrowers are charged nominal interest rates of 9% onwards against the personal loans. The borrower can avail of loans within 48 hours for the offline mode and within a few minutes or hours in the online application for the loans. The borrower is charged a processing fee in the range of 0.50%-2.50% as a one-time processing fee. The borrower’s credit limit depends upon the salary of the borrower. The higher the salary higher is the loan amount approved by the bank. In case of a lower salary lower amount is approved by the bank. The bank can approve the loans of a maximum amount of Rs.25 lakh in case of the upper limit of the loan amount. The banks can approve the loans only if proper documentation is submitted and the borrower’s credit score should be more than 700 points. Banks are usually reluctant to approve the loans to people whose credit score is less than 700 points.
In an alternate case, the banks may charge higher interest rates to the borrower in case of a low CIBIL score. There are 21 PSU banks, 80 private banks & 1000+ cooperative banks which provide personal loans to the borrower. Thus if the loan is rejected from one of the lenders, then, in that case, the loans can be approved from some other lender. The banks provide loans only if the borrower is debt-free. If the borrower is already in debt, then, in that case, the bank may reject the loan of the borrower. Banks charge a heavy penalty in case of delay or default of installments; thus, the borrower should ensure that the loans installments should be repaid on time by the borrower to the lender. Also, the delay or default of the loans can lead to the lowering of the CIBIL score of the borrower. Thus in case of a lower CIBIL score, future loan applications can be rejected by the borrower, or else higher interest rates may be charged to the borrower. The personal loans market in India is growing India very rapidly due to the ever-increasing demand for personal loans. The market is highly penetrated due to the excessive competition amongst the lenders.
Eligibility for the personal loan amount:
The bank may approve the loans of Rs.25 lakh maximum in case of personal loans to satisfy the borrower’s needs. However, there is no specific calculation for the approval of loans amount, which the bank will approve. The bank firstly checks the borrower’s credit score and whether any existing loans are running of the borrower. The bank may have to rethink the approval of the loans in case of the existing debt being running of the borrower. Lenders, before the approval of the loan, check the salary of the individual and also the income growth potential in the profession of the borrower. In most cases, the borrowers are eligible for 30 times the monthly salary as loan amount in case of personal loans. To avoid the default of loans, the lenders keep the credit amount up to a maximum of 45-60% of the monthly salary. If the monthly in-hand salary of the borrower is Rs.20-25 thousand, then, in that case, the loans would be approved of 12,500 monthly EMI, which is 50% of the borrower’s salary. The minimum gross salary which the bank expects is Rs.25,000 per month or beyond for the personal loans to be approved.
Thus the maximum loans approved by the borrower are Rs.25 lakh, up to which the personal loans can be approved. The banks charge interest rates of 9-24% per annum depending on the lender and depending on the borrower’s suitability. The borrowers with low CIBIL scores are charged with higher interest rates; thus, the borrower should ensure that the CIBIL score of the borrower should be increased before applying for the personal loans.