Are you applying for a personal loan?
The decision to consider a personal loan comes with discipline and dedication. Therefore, you must do your research well. Personal loans are one of the most readily available credit facilities today. Besides, personal loan interest rates are lower than credit cards.
Most large electronic and home appliances stores have counters of banks or NBFC representatives ready to assist with your expensive purchases. More so, you can also use your loan while shopping online. But before you begin with the personal loan application online or offline process, here are some questions you need to ask.
Why is the loan required?
A personal loan can be used for many personal needs for which you do not need any collateral. For example, you can use the extra funds for any urgent and personal needs, such as hospitalization or funding a holiday.
On the other hand, if you are a salaried person, you can take the first loan to help you build or establish your credit score.
How many funds do you need?
One of the most crucial questions you should ask yourself is why you borrow funds from your lenders. Taking a loan of a higher amount may look tempting, but know that you need to pay back your personal loan with interest. And due to any unforeseen circumstances, if you default on your repayments, it can impact your credit score adversely.
Ensure that your total EMIs (Equated Monthly Installments) stay within 40% of your monthly income. You can use a personal loan eligibility calculator to deduce this.
What is the tenure of your personal loan?
Make sure you figure out an ideal case scenario of the right-sized EMIs and tenure that works out for you. While a longer duration would imply smaller EMIs, you land up paying more interest over the entire tenure of your personal loan. Conversely, a shorter term would increase the EMIs.
Ideally, the tenure of a personal loan ranges from 12 months to 60 months.
What personal loan foreclosure charges would I incur apart from the interest rate?
While shortlisting a lender with the right offering, do consider other personal loan foreclosure charges such as processing fees, prepayment penalties, late payment charges, etc. And when considering personal loan interest rates, also look at the ease at which your loan gets processed.
Some lenders also charge an origination fee, which is a percentage of the total amount given as a loan.
What documents do I need to keep ready?
Lenders typically need one ID proof, address proof and income proof as their personal loan documentation requirements. Here are some acceptable documents by banks and NBFCs:
- PAN Card, Driving license, Aadhaar card, Passport or Voter ID as ID proof
- Aadhaar Card, Ration Card, Voter ID or Utility Bills (phone bill, electricity bill, etc.) as address proof
- Your ITR of the last two years, if salaried, or certified P/L statement, if business-owner, acts as income proof
Am I eligible for a personal loan?
You need to meet the personal loan eligibility criteria if you are considering a personal loan:
- You must be an Indian resident
- Your age should be in the range of 23 to 58 years
- You should have a good credit score
- If salaried, your income should be more than INR 30,000 every month
Most lenders specify their eligibility requirements on their websites with the help of personal loan eligibility calculators.
How do I apply?
You can apply for a personal loan in two ways:
Compare the best personal loans on ApnaPaisa and apply online.
Visit the nearest branch of your lender with the necessary documents.
