Personal Loans are being used by an increasing number of people to cover higher bills. One of the reasons for the surge in popularity of Personal Loans is that they are unsecured loans that do not demand collateral and have a rapid processing
period. Any bank or non-banking financial institution can effortlessly provide you with a Personal Loan. You can avail of the benefits of Personal Loans instantly with the hassle-free and easy loan disbursement policy of the financial
What is a Personal Loan?
Personal loans are unsecured loans offered by financial institutions and are based on factors such as employment history, repayment capacity, income level, profession, and credit history. A personal loan, also known as a consumer
loan, is a multi-purpose loan that can be used to cover a variety of immediate requirements.
What are the advantages of getting a personal loan?
Unlike other kinds of loans, such as a home loan or a gold loan, which require more paperwork. Personal Loans only require a few and the approval procedure is rapid.
Personal Loan online services are available from a variety of financial institutions, and the loan amount is disbursed within a few hours if the lender is satisfied with your repayment capabilities.
Another significant characteristic of a personal loan is that the lender allows you to determine your loan tenure. Personal loans usually have a term of one to five years. As a result, you can choose your loan term based
on your payback ability. Sticking to the safer side, you should take out a shorter loan to save money on interest and pay off the balance sooner.
The maximum amount you can owe is determined by your income, career, and the lender's evaluation of your loan application. Generally, lenders approve loans based on their calculations, ensuring that the EMI does not exceed 40% to 50% of your
monthly income. When assessing the loan amount, lenders also verify your outstanding debts.
If you own a business or are self-employed, the lender will calculate the loan amount based on the profits you earn and record it on your profit and loss statement. If you are a salaried employee, the lender will calculate the loan amount
depending on your pay and other obligations.
What documents are needed to apply for a personal loan?
Although the documentation required by each lender differs, you must submit the following documents with your application form:
Required Documents to Apply for a Personal Loan:
Salaried income documents:
Self Employed person documents:
PAN Card of applicant
Last 3 months' salary slip
Income tax returns of previous 2 years
Cancel cheque or bank passbook front page copy
Aadhaar Card of the applicant
Form 16 of last 2 years
Statement of finances with a proper balance sheet with profit and loss in that sheet
Any recent loan with a proper repayment sheet
Driving Licence of applicant.
Income Tax Return if any of last 2 Years
Bank statement with continuity of business
Voter ID of the applicant
Last 3 months' bank statement if the salary directly credited in the bank account
GST registration evidence of business
Passport of applicant
Certificate of employment from current employer
Eligibility criteria for getting a Personal Loan
Age of applicant - The age of the applicant always plays an important role in the rate of interest as well as the tenure of Personal Loan
and the minimum age should be 21 Years and the maximum age decided is 60 Years.
Income of applicant: the loan amount is decided by the income of the applicant and the income should not be less than Rs.15,000/-
per month some banks do consider an in-hand salary of Rs.13,000/- per month as well.
CIBIL score: it was always recommended to have a CIBIL score of 700 and if your CIBIL score is no less than 650
then you’re also eligible for the loan amount.
Continuity of Job: this differs from different bank policies and requires a minimum 3-month job or more.
Occupation: the eligibility is different, but the applicant who is salaried employees, self–employed professionals, self–employed nonprofessionals,
and private limited companies are applicable.
*This is general information regarding the eligibility criteria for Personal Loan. However, it may vary from one lender to another.
How important is a Credit Score for the approval of a Personal Loan?
Your credit score reflects how responsible you are for handling your credit. Personal loan applicants with high credit scores, often 650-700 and above, demonstrate credit discipline and hence have increased chances of being approved by banks and NBFCs.
However, some banks and NBFCs charge higher interest rates for personal loans to people with bad credit. Such applicants are also more likely to be approved for personal loans with reduced interest rates. As a result, one should check their credit ratings on a frequent basis.
Individuals with no or low credit scores can use secured credit cards to improve or rebuild their credit
How to improve the chances of getting a Personal Loan?
Credit Clean-up: Your credit score is one of the most important variables that lenders check. A high credit score makes it easier to obtain a personal loan. If your score is poor, you should double-check your reports for any inaccuracies.
Sometimes, simple inaccuracies can have a negative impact on your scores, and you must submit them to CIBIL if you discover any.
Rebalancing your income and debts: When you apply for a personal loan, lenders will ask for proof of income to determine your debt-to-income ratio. To boost your annual income, consider selling liquid assets like stocks or taking on a part-time
job. This will raise your debt-to-income ratio and your chances of getting approved for a loan.
Consider Co-signers/Guarantors: If you’re having trouble getting a personal loan on your own, you can apply with the help of a co-signer or guarantor. A solid credit score is required of the individual you choose as a guarantor. Their primary goal is to ensure that you return the debt. They will, however, be responsible for repaying the debt if you are unable to do so.
Choosing someone with a credit score of 650-700 can significantly improve your chances of obtaining a personal loan
Limit Borrowing : Asking for more money than you need to fulfill your financial goals can be too risky. Make sure you figure out how much you'll need and just apply for that amount.
Choose the Right Lender : When it comes to credit scores and income, each lender has its own set of requirements. Choose a lender whose eligibility criteria you fulfill and apply accordingly while looking for personal loans. The trouble with
applying to many lenders is that each one will examine your credit score, and each time your full credit report is accessed, your credit score declines slightly.
How can we avoid the rejection of the Personal Loan application?
Many factors influence the approval of a personal loan application. When applying for a loan, make sure you meet all of the requirements to ensure that your loan application is approved.
Personal loan eligibility standards differ from one lender to the next. However, there are certain common requirements, such as the applicant’s age, income, credit score, employment status, and so on. Make sure you meet all of the qualifying requirements before applying for a loan. This will assist you to avoid having your loan application rejected. Although you have alternative options if your loan application is initially rejected,
it is essential that you double-check before applying to avoid the chances of rejection of the loan.
A personal loan is an unsecured loan that you can get from a bank or financial organization to help you meet your financial obligations.
When you need credit, you apply for a loan. The lender verifies and accepts your personal loan application when you submit it to them. The loan money is then transferred to your bank account. You must reimburse the lender via EMIs for the duration of the loan repayment period after receiving the loan amount.
The maximum loan amount is determined by your monthly income. There are lenders in India that will lend up to 30 times their monthly income.
To get a personal loan, banks usually require a CIBIL score of at least 650-700, but the more your credit score will be, the more your chances will increase for approval. If your credit score is low, your application may be denied, or you may be offered a personal loan with excessive interest rates.
If your personal loan application is denied, it is most likely because of your poor credit score or because you do not match the eligibility requirements. Your personal loan application will not be denied if you meet the eligibility requirements and keep your credit score maintained.
Yes, a personal loan can be obtained without the submission of pay stubs. To meet the eligibility criteria, you can send your bank account statement, a copy of Form 16, an employee certificate from your employer, or other proof of income. However, because the list of required documents varies from one bank to the next, it is usually a good idea to double-check with the lender.
Yes, you can utilize a personal loan to cover wedding expenses because personal loans have a flexible end-use. Some lenders also provide wedding/marriage loans as a type of personal loan.
Enter the code we just send on your mobile phone +91-