Personal Loans can be a helpful way to finance various expenses, such as home renovation, online courses, medical bills, debt consolidation or unexpected emergencies. Personal Loans often have fixed interest rates and a set repayment schedule, making them a predictable and manageable option for borrowers. However, knowing where to start when looking for a personal loan can be challenging with so many banks and options available.
To help you choose the best loan, this article discusses the easiest ways to take a Personal Loan.
Understanding Personal Loans
Before you apply for a Personal Loan, it is essential to understand what it is and how it works. A Personal Loan is an unsecured loan that a bank or other financial institution gives borrowers. It is given on the basis of your credit score, income, and other eligibility factors. Unlike a secured loan, such as a Home Loan or a Car Loan, a personal loan does not require collateral and has eligibility criteria that can be easily met.
Easiest Way to Take a Personal Loan
Now that you know better why people take personal loans, let’s focus on the easiest way. Here are some steps you can follow.
- Compare Banks
The first step is to compare different banks. Research banks thoroughly and compare their interest rates, processing fees, loan amount, repayment tenure, and other features. You can use online loan comparison platforms or visit banks’ websites to understand their offerings. Choose a bank that offers the best terms and conditions that suit your needs.
- Check your Eligibility
Once you are done with research, check your eligibility. You can use a Personal Loan Checker available online to determine your eligibility. The eligibility criteria vary from bank to bank but generally include age, income, credit score, employment status, and work experience. Here are some factors that lenders may consider while calculating your personal loan eligibility.
- Monthly Income: Lenders usually require a minimum income of Rs 30,000 per month (can change) to be eligible for a personal loan.
- Credit Score: A good credit score of 750 or above can increase your chances of loan approval and help you negotiate better interest rates.
- Employment History: Banks also consider your employment history to determine loan eligibility. A work experience of minimum 2 years is required to take a Personal Loan.
- Years in Current Residence: You should live there for at least a year.
Once you know your eligibility status, you can apply for a loan with a bank that will likely approve your application.
- Decide the Loan Amount
Once you meet the eligibility criteria of your preferred bank, you should decide how much amount you need to borrow. Calculating the loan amount carefully is essential to avoid borrowing more than you need or can afford to repay. You can use a loan calculator on your bank’s website to calculate the EMIs (Equated Monthly Instalment) and the total interest payable on the loan. This will help you decide on the loan amount that suits your needs and repayment capacity.
- Gather the Required Documents
To apply for a Personal Loan, you must provide certain documents, such as proof of identity, address, and income. Gathering these documents beforehand can speed up the loan application process. Here’s a list of some of the standard documents all banks ask for
- Aadhaar Card or PAN Card
- Passport, Voter ID, or Driving License
- Bank statements for the last three months
- Salary slips for the last three months
- Income Tax Returns for the last two to three years
- Apply Online
Instead of visiting the branch and doing the formalities, applying for a Personal Loan online is better. Most banks have a simple and user-friendly online application process that can be completed in minutes. You will need to provide your personal and financial details, including your loan amount, repayment term, and mode of repayment. Make sure you read the terms and conditions carefully before submitting your application. Not only this, but you can also use your bank’s app to apply for a Personal Loan easily.
- Wait for Approval
Once you complete the application form and upload all the required documents, you must wait for the bank to process your application. Some banks might take 2-3 business days to do the same, while others might approve it more quickly. Not only this, if you have eligible for a pre-approved Personal Loan, you then need to provide your bank with the documents and your loan is sanctioned. Do not forget to read the terms and conditions carefully before submitting your application.
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Use a Personal Loan Checker
A Personal Loan Checker helps you estimate your potential interest rate and monthly payment. It is also referred to as Personal Loan Eligibility Calculator. It is available on your bank’s website and asks for the loan amount, interest and tenure. Based on this, it provides the estimated EMIs you need to pay each month for your tenure. The estimates are not entirely accurate but help you understand and manage your finances.
Conclusion
Personal Loans are a convenient way to access funds when needed, but it’s important to approach them cautiously and carefully evaluate your options. Getting a hold of the applicable terms & conditions, interest rates, and repayment schedules is crucial to making an informed decision about taking out a Personal Loan.
While there are multiple ways to take a Personal Loan, it’s imperative to find the easiest one that suits your financial requirements while providing the best possible terms. Choose wisely!
