Personal Loan

Personal loans are a popular choice for funding lifestyle goals and addressing financial gaps because they are easy to get, require minimal paperwork, and offer quick disbursement. Here are the key features and benefits of personal loans:

• Collateral-free loan
• No end-use restriction
• Interest rate usually starts from 10.49% p.a.
• Loan amount of up to Rs. 40 lakh, which can exceed depending on lenders’ discretion
• Repayment tenure up to 60 months, which may exceed on case-by-case basis
• Top up loans for additional requirements are offered by many lenders
• Minimal documentation
• Quick disbursals

The fees and charges for personal loans can vary significantly based on the lender and the credit profile of the applicants. The following table provides a general overview of the common fees and charges associated with personal loans:

Other fees and charges levied by the lenders include documentation charges, verification charges, duplicate statement charges and NOC certificate charges.

Personal loan eligibility criteria can vary from one lender to another due to their varying credit risk policies. Lenders may have different requirements for personal loans based on the type of loan and the borrower's job. Here are some things most lenders look at to decide if you qualify:

Age: 18 to 60 years.

Salary: Salaried customers should have a minimum monthly income of at least Rs 15,000.

Income: Self-employed customers should have an annual income of at least Rs 5 lakh.

Credit Score: A credit score of 750 or higher is preferred, as it increases the likelihood of loan approval.

Employment Stability: Typically, a minimum of 1 year of work experience is required, although some lenders may ask for a longer period.

Business Continuity: For self-employed individuals, most lenders require a business continuity of at least 3 years, although some may demand a longer history.

Employment Type: Salaried employees should be working with reputable organizations, including MNCs, Private and Public Limited Companies, Government organizations, PSUs, and large enterprises.

Personal loan lenders typically require applicants to provide a set of standard documents to establish their identity, income, loan repayment capacity, and residential address. These required documents are generally consistent across various lenders. Here are the common documents you'll need to submit when applying for a personal loan:

• Passport
• PAN Card
• Voter's ID
• Aadhaar Card
• Driving License

• Passport
• Aadhaar Card
• Lease Agreement or Property Purchase Agreement
• Utility Bills (not more than 3 months old)
• Driving License

• Salary Slips
• Bank Account Statements
• Form 16

• Previous Years' Income Tax Returns (ITR)
• Profit and Loss Statement and Balance Sheet
• Bank Account Statements

• Business Incorporation Certificate
• Professional Degree or Certificate of Practice
• Partnership Deed
• GST Registration and Filing Documents
• Memorandum of Association (MOA) and Articles of Association (AOA)
• Shop Act License

These documents help lenders assess your eligibility for a personal loan and ensure that you meet the necessary criteria.

Instant Personal Loans:

These are typically pre-approved loans with quick disbursement, offered by banks and NBFCs to their chosen customers based on their credit profiles.

Short-term Personal Loans:

These loans come with shorter repayment periods, ranging from a few days to 12 months.

Pre-approved Personal Loans:

Offered to existing customers of banks and NBFCs, these loans are based on credit history, income, employer's profile, and more.

Consumer Durable Loans:

These loans can be used to buy various consumer durable items like smartphones, furniture, microwaves, etc. The purchase amount is divided into EMIs, and repayment can be done within the chosen tenure. Some products may require a down payment or a processing fee.

Personal Loan Balance Transfer:

This option allows borrowers to move their outstanding personal loan to a new lender for lower interest rates or better loan terms. Consider this option if the savings from the transfer outweigh the transfer cost.

Personal Loan Top-Up:

Existing personal loan borrowers can get additional funds to meet their financial needs. This is typically available to borrowers with a good repayment history and/or after completing a specified number of EMIs.

Personal Loan for Education:

Designed for individuals who need funds for higher education in India or abroad, as well as vocational courses, when conventional education loans are not an option.

The absence of collateral in personal loans heightens the credit risk for lenders, as it means there is no asset to offset potential losses in the event of a loan default. To address this risk, banks and Non-Banking Financial Companies (NBFCs) take into account multiple facets of applicants' credit histories and adhere to rigorous eligibility criteria when assessing loan applications. Individuals looking to secure a personal loan can enhance their approval prospects by following these guidelines:

When searching for a personal loan, it's crucial for potential borrowers to compare offers from multiple lenders. While it's possible to check personal loan offers by visiting the websites of various banks and NBFCs individually, using an online financial marketplace like MybankingTips can expedite the process, simplify it, and offer added convenience. Here are a few more reasons to consider applying for personal loans through MybankingTips:

mybankingtips.com enables customers to easily compare personal loan offers from over 30 banks and NBFCs and apply for the most suitable offer online. Here are the steps to do so:

A personal loan is a type of loan that individuals can obtain for various personal or business needs, excluding speculative purposes. Personal loans are typically unsecured, meaning borrowers are not required to provide collateral or security to secure the loan.

Applicants with credit scores of 750 or higher typically have a greater likelihood of being approved for personal loans. Nevertheless, it's worth noting that some banks and NBFCs do provide personal loans to individuals with lower CIBIL scores or credit scores. However, in such cases, these lenders may impose higher interest rates to offset the increased credit risk associated with these borrowers.

Interest rates for personal loans from top banks and NBFCs begin at 10.49% per annum, with the exact rate depending on the applicant's credit profile. It's worth noting that certain public sector banks may extend even lower interest rates to their personal loan applicants.

Individuals have multiple options for applying for a personal loan. They can visit a nearby branch of their preferred bank or NBFC. Additionally, they can also apply for the loan through the lender's official website or use the lender's internet banking platform and mobile applications.

Consumers have multiple options to obtain a personal loan. They can visit a nearby branch of their preferred bank or NBFC to apply. Additionally, many lenders offer an entirely digital application process through their official websites, making it convenient for consumers to apply online.

For those who have an existing banking relationship with a specific bank or NBFC, they can use the respective bank or NBFC's mobile application or internet banking platform to apply for a personal loan. Alternatively, consumers can explore the option of obtaining a personal loan through online financial marketplaces.Top of Form

A standard personal loan typically has a tenure ranging from 1 to 5 years. However, there are some lenders that provide an extended maximum personal loan tenure, which can go up to 6 to 8 years.

In certain situations, it may be possible to cancel a personal loan after it has been disbursed, depending on the lender's terms and conditions. However, canceling a loan typically involves incurring cancellation charges and processing fees.

It's essential to be aware that not all banks permit loan cancellation after disbursement. Nevertheless, borrowers can often choose to prepay the loan amount in accordance with the bank's terms and conditions, allowing them to save on the interest component.

Lenders provide personal loans to pensioners in the form of pension loans. However, these loans are typically available exclusively to pensioners who hold their pension accounts with the same bank.

The minimum monthly income required to qualify for a personal loan can differ from one lender to another. Nonetheless, major lenders such as private and public sector banks typically set the minimum income eligibility at Rs 15,000 per month or more.

Students may be eligible to apply for personal loans if they meet the specific eligibility criteria established by lenders. These criteria often relate to factors like age, income, credit score, and more.

Yes, it is possible to apply for a personal loan while you already have a home loan. However, the approval of your loan application will be contingent on your ability to demonstrate that you possess the necessary repayment capacity to service the additional loan.

Yes, it is possible to obtain a personal loan without providing salary slips. You can often submit alternative documents such as your bank account statement, a copy of Form 16, an employee certificate from your employer, and more as proof of income to meet the eligibility criteria. However, it is advisable to verify the specific document requirements with the lender, as they may vary among different banks.

Yes, it is possible to obtain personal loans from two different lenders simultaneously, as long as the second lender is content with your ability to make repayments. Nevertheless, it is generally advisable to opt for a single loan with a larger amount from the lender offering more favorable interest rates and terms and conditions, if possible. This can often result in better overall terms for the borrower.

Yes, you can obtain a personal loan or its specialized variants, such as a wedding loan or marriage loan, to cover various expenses related to a wedding.

Lenders have the discretion to impose prepayment or foreclosure charges on personal loans acquired at fixed interest rates. However, it's important to note that the Reserve Bank of India (RBI) has prohibited lenders from imposing these charges on loans obtained at floating interest rates.

Traditionally, personal loans are unsecured, meaning borrowers are not required to provide collateral or security to secure the loan. However, certain lenders also provide secured personal loans, where the borrower must offer collateral or security to obtain the loan. Opting for a secured loan is typically considered when the borrower is ineligible for an unsecured personal loan or when they face exceptionally high interest rates on unsecured loans.

Banks and Non-Banking Financial Companies (NBFCs) commonly employ the reducing balance method to compute personal loan Equated Monthly Installments (EMIs). Individuals can easily access various online personal loan EMI calculators on the websites of lenders and other online platforms. These calculators also use the reducing balance method to determine the EMIs accurately.

Lenders typically offer personal loans ranging from Rs 10,000 to Rs 40 lakhs. However, the approved amount largely depends on your income and existing loan obligations. Some banks and NBFCs use the Multiplier Method, where they calculate the eligible loan amount as a multiple (usually between 10 and 24 times) of your net monthly income.

Other lenders follow the EMI/NMI Ratio approach, ensuring that the EMI of the proposed loan doesn't exceed a predetermined portion of your income. Some lenders may even use a combination of these methods to determine the eligible loan amount for the applicant.

Lenders may use different methods like the EMI/NMI ratio or the multiplier method to assess an applicant's eligible personal loan amount. Since these ratios can vary among lenders, the maximum personal loan amount you can secure with a monthly salary of Rs 40,000 will differ. To determine your specific eligible loan amount, you'll need to contact each lender individually.

Alternatively, you can explore online financial marketplaces that provide a convenient way to view eligible personal loan amounts from multiple lenders. These platforms consider your repayment capacity, interest rates, and loan tenure to offer you personalized loan options.

You can calculate the Equated Monthly Installment (EMI) on your personal loan using the formula:

EMI = [P x R x (1+R)^N] / [(1+R)^N-1]

Where:

- 'R' represents the rate of interest

- 'P' represents the principal amount

- 'N' represents the loan tenure

Using an online personal loan EMI calculator is preferable because manual calculations can be error-prone, complex, and time-consuming. The calculator only requires a few essential details for personal loan EMI calculation, including the interest rate, loan amount, and loan tenure.

Once you input all the necessary information, the calculator provides your loan EMI amount in a matter of seconds. Additionally, it not only calculates the EMI amount but also presents the total interest amount and an amortization schedule for your convenience.

Banks and NBFCs assess an applicant's personal loan eligibility by considering factors such as age, credit score, income, loan repayment capacity, occupation profile, and the employer's profile. Eligibility criteria for personal loans can differ among lenders due to varying credit risk policies.

As a result, applicants may need to determine their eligibility for a personal loan by visiting the branches or websites of different banks and NBFCs individually. Alternatively, they can simplify the process by visiting online financial marketplaces like mybankingtips.com, where they can check and compare personal loan offers from multiple banks and NBFCs based on their credit profiles.

The government does not impose any taxes on the acquisition of personal loans or on their Equated Monthly Installments (EMIs). However, banks and Non-Banking Financial Companies (NBFCs) apply Goods and Services Tax (GST) to various charges associated with personal loans, including processing fees, late payment fees, foreclosure or prepayment charges, and other applicable fees.

When applying for a personal loan, lenders typically request applicants to provide documentation to verify their identity, income, and address. The documents required for identity and address verification are relatively consistent for all applicants and across various lenders.

However, the list of income proof documents varies for salaried and self-employed applicants. Salaried individuals typically need to provide salary slips and bank statements as income proof. Self-employed applicants, on the other hand, are usually required to furnish bank statements for their current or savings accounts, audited financial statements (including the balance sheet and profit & loss account), and income tax returns when applying for a loan.

Typically, personal loans are unsecured, meaning you don't need to provide any collateral. However, some lenders also offer secured personal loans. In these cases, borrowers are required to pledge assets like gold jewelry, fixed deposits, bonds, shares, or debentures as security to obtain the loan. Additionally, there are personal loans available for buying consumer durables where you make a down payment and create a hypothecation on the purchased items.

The minimum income criteria for qualifying for personal loans can differ from one lender to another. Major lenders generally set a minimum monthly income requirement that typically falls between Rs. 15,000 and Rs. 30,000. However, there are lenders who may extend personal loans to individuals with lower monthly income. Therefore, individuals with lower salaries may explore online financial marketplaces to ascertain if they are eligible for any personal loan offers based on their current income.