Unsecured loans include personal loans. You are not required to use any asset as security or as collateral. You buy a new home when you take out a mortgage. with a similar vein, a car loan assists with new car purchases. A personal loan is distinct from other kinds of loans, though. There are no limitations on how it should be used. You can use it to fulfil any personal financial needs, such as throwing a wedding, remodelling or rebuilding your home, or covering unexpected medical expenses.
Using a straightforward application process, obtaining a personal loan is simple. The bank need not check the information because there is no security or collateral.
Let’s Explore the Process to Apply for a Personal Loan in 5 Easy Steps.
Before you initiate applying for a Personal Loan, you need to determine your requirement. What is the purpose of the loan, and how much do you need? For instance, if you want to use the loan to renovate your home, your requirement can be much bigger than planning a family vacation. Knowing your loan requirement can help calculate your monthly installment and assess your capability to repay the same.
Let’s Explore the Process to Apply for a Personal Loan in India.
Step 1: Evaluate the eligibility criteria
There are eligibility criteria for every type of loan. In the case of a Personal Loan, the applicant must not be below 22 years of age. Moreover, at the time of loan closure, the individual’s age should not be more than 58 years. The applicant must be an Indian citizen and currently reside in India.
The amount of loan you are eligible for will depend on your salary. You must have a monthly salary of at least Rs. 20,000. Moreover, the applicant must have a full-time job at an LLP or a public/private company with work experience of at least one year. The employee must have stable employment at the current job for at least two months.
Visit the lender’s website to understand their eligibility criteria for personal loan and the documents you require to proceed with the loan application.
Step 2: Check interest rates and processing charges
The interest rate offered by a bank depends on your credit score, employer, age, work experience, etc. A higher credit score guarantees a lower interest rate. Similarly, if you work with a company that has a good reputation, you can expect to get a better loan amount, interest rate, and loan tenure.
An attractive interest rate starts at 9.99%. Apart from the interest rate, lenders charge a processing fee, ranging between 0% and 2% plus taxes. Inquire about the same because the processing fee is an extra burden on loan applicants.
Step 3: Calculate your monthly installment
Using an online EMI calculator, you can estimate the monthly installment you need to pay. You need to know the total loan amount, interest rate, and tenure for the calculation. You can alter the interest rate and tenure to match your monthly income.
Step 4: Collect required documents
Every lender provides a list of documents they need to process your loan application. If you apply online for a Personal Loan, you require soft copies of these documents. Visit the lender’s official website and the relevant page for the loan you require to get a list of the required documents. Generally, you will need the following:
- Proof of Identity (Driving license, voter ID card, PAN Card, passport)
- Proof of Age (PAN Card, passport, certificate from a statutory authority)
- Proof of Address (Electricity bill, driving license, bank statement, passbook, rental agreement, ration card, telephone bill, passport)
- Proof of Income (bank statement of last 6 months, salary slips for 3 months, or passbook)
- Recent passport-sized photographs
- Income tax returns
- Form 16
- Processing fee cheque
Step 5: Fill out the application form
Most reputed lenders provide online and offline application processes. Visit the nearest branch for consultation and fill out the application form. You will need to carry photocopies of the required documents to submit along with the application form. Or you can choose to fill out the form online on the lender’s official website. Make sure you have soft copies of all the required documents ready for uploading after submitting the application form.
- On the lender’s website, visit the online loan application page.
- Select employment type.
- Enter your name, mobile number, email ID, date of birth, PAN card number, net monthly income, Pin code, and qualification.
- You will need to verify your mobile number by entering an OTP.
- Enter the required loan amount and the expected tenure.
- Fill out your employment details and your bank details.
- Upload the documents as prompted.
- Submit the application form. You will be notified if you are eligible for the loan.
- A customer care executive will get in touch with you to discuss the next steps till your details are verified by the lender.
- After your loan is approved, the loan amount will be disbursed into your bank account.
What to Consider Before Submitting a Personal Loan Application?
Every financial product has eligibility criteria and an approval process. It is a good idea to check the procedures, features, and criteria before proceeding with a loan. You must also compare the loan offerings from different lenders. Here are the factors you need to consider for your comparison:
Interest rate
The loan interest rate varies from one bank to another. Select a bank with the lowest interest rate. A lower interest rate reduces the amount of interest you need to pay, thereby reducing the amount of your monthly installment. You can negotiate with banks as they are flexible with the interest rate for customers with a good credit score and decent credit history
Processing fees
Banks charge an internal fee for assessing your candidature for loan approval. Most banks do not refund this processing fee if your loan is rejected. Thus, please submit all documents carefully to avoid rejection. Some banks do not charge a processing fee to attract customers. Make sure you read the product information before proceeding. You can also negotiate with the loan agent to waive the processing charges.
Approval time
A Personal Loan has fewer eligibility criteria. Therefore, the approval time is less than five working days. Some banks take only 24 hours to approve and disburse the loan. The online application process is fast and gives lenders all the information they require instantly.
Loan tenure
A longer tenure looks attractive, but it isn’t since it makes the borrower pay more interest. So, use different metrics for interest rates, EMIs, etc., to arrive at an ideal loan tenure.
Conclusion
It is easy to get a personal loan with minimum documents. But, in certain cases, reputed lenders may demand you to submit more documents. Make sure you check with the lender beforehand to avoid any surprises. Besides, remember to read loan offers, loan eligibility, and the repayment schedule. There is no value of verbal assurance in monetary transactions. Therefore, always believe in written documents. The approval of a personal loan does not require much time. Your bank can approve the loan within 24 hours.
FAQs
1.Can we take a Personal Loan online?
Yes, you can take a Personal Loan online. Many lenders now provide the convenience of online loan applications, allowing borrowers to complete the application process digitally and receive loan approval & funds almost instantly.
2.Who can apply for a Personal Loan?
Individuals such as Chartered Accountants (CAs), Company Secretaries (CS), Doctors, Salaried Individuals and Government Employees can apply for a Personal Loan. Applicants just need to meet the eligibility criteria set by the lender, including age, income, credit history, and employment status to avail themselves a loan. The specific requirements may vary between lenders, so it is advisable to check with the lender for their specific Personal Loan eligibility criteria.
