A personal loan is frequently used to cover both anticipated and unexpected needs. The fact that they are quick to distribute and do not consider them makes them even more appealing. But how can you tell if you’re suitable for a personal loan?
Here’s the lowdown on personal loans, including the criteria for eligibility and papers, as well as the advantages they provide.
Personal loan understanding
A personal loan is a sort of no-collateral loan that many people choose, especially for large purchases. It can be acquired from a bank or a non-banking financial corporation (NBFC) to cover personal financial requirements such as higher education, child education, marriage, or emergency situations.
Personal loans are granted based on important factors such as income, trustworthiness, employment record, monthly income, and etc. It does not, however, require the borrower to provide security in the form of property or gold in order to obtain the loan.
While personal loans have higher interest rates, having a solid credit score and a high and steady income allows you to get one at a low rate of interest.
Eligibility for personal loans
Personal loan eligibility differs from one bank to the next. However, the general criteria for age, income, profession, repayment ability, and other factors remain the same or may differ somewhat.
Before starting the paperwork, make sure you are eligible to apply with the bank of your choice. The following is a list of general personal loan eligibility.
- To apply for a personal loan, the borrower must be at least 18 years old and no more than 60 years old.
- A personal loan is available to both salaried and self-employed individuals.
- Personal loans to salaried individuals having a monthly wage of INR 25,000.
- Self-employed people who seek personal loans need to show proof of a consistent monthly income.
- It should be mentioned that a personal loan can indeed be acquired without proof of income. However, with a co-borrower, such as a family member or acquaintance with a steady income, the loan can be obtained.
- Personal loans without income evidence can be obtained with 100 percent collateral, while being an unsecured sort of loan.
- Fixed deposits, insurance, shares, national savings certificates, or any other tangible or government securities can be used as collateral.
- Because of their consistent income, most financial institutions favor salaried employees for personal loans.
- Personal loans available to employees of private limited firms and public sector undertakings, including federal, state, and municipal councils.
- A personal loan of up to INR 40 lakhs is possible, but the amount will rely on the earnings.
- Personal loans are repaid over a range of 12 to 60 months for both salaried and self-employed clients.
Personal loan documents required
Along with the loan application, both salaried and self-employed individuals must provide certain documentation. These personal loan documents are proof of eligibility against the established criteria, thus they are thoroughly inspected before approval.
- Income proof (past three months’ salary slip or bank statement for salaried personnel; prior year’s ITR/P&L Statement and balance sheet for self-employed)
- Proof of identification (copy of passport, Voter ID, PAN card, Aadhar card, driving license)
- Proof of address (copy of passport, Voter ID, PAN card, Aadhar card, driving license, utility bills)
- Depending on the eligibility criteria of the respective bank, a bank statement or a copy of a passbook for the previous 3-6 months may be required.
- Proof of business (certificate of practice/partnership deed/GST registration and filing documents/MOA and AOA/Shop Act License)
- Salary certificate from the most recent pay period, and most recent Form 16
- Two recent passport-sized photos
In addition to these, certain banks may need additional documents for personal loans. As a result, double-check all of the details before completing the application.
Features and Benefits of personal loan
For certain purchases, various lending alternatives are open. A credit facility, on the other hand, can be used for anything. As a result, it is a popular option among borrowers. There are also some other advantages of unsecured loans that are discussed further down.The personal loan app is a useful tool for online services of personal loans.
Personal loan schemes come with a flexible term period ranging from 12 months to 60 months, in addition to the flexibility of usage. That is, there are no restrictions on how the money can be used, and there is no obligation to repay the loan. Simply divide your loan amount into manageable EMIs and pay them off over time until the term is up.
Obtaining collateral is the most terrifying aspect of applying for the loan. But don’t panic, personal loans are here to help. The loan is granted based on the creditworthiness, income, employer/business reputation, payback capacity, and other factors of the loan applicant.
- Payments are made quickly.
Because of the low documentation and simple application process, personal loans are noted for their quick approval. Simply choose the product you want, gather the necessary documents, choose the loan amount and term based on your eligibility, and have the money disbursed without delay.
Documentation is simple
When compared to other loan types, the paperwork and processing time necessary when applying for a personal loan is significantly less. When asking for a personal loan without documentation for salary/income proof, Muthoot Finance offers quick loan disbursement on Aadhaar card or with 100 percent collateral.
A personal loan is the solution if you require immediate funds to meet your financial obligations. Visit your nearest financial institution for a simple application process and immediate loan payout at low interest rates.