Things To Consider Before Obtaining A Personal Loan

A personal loan is an unsecured loan that can be used for various purposes like weddings, higher education, vacation, funerals, parties, birthdays, business, renovation, designing, medical emergencies, asset buying.construction, furnishing, electronic gadgets, and/or any other specific or general purpose. This loan can be legally availed using a bank or Non-Banking Financial Companies(NBFC). Both online and offline services are available and instant disbursal of the loan is a gigantic advantage.

Factors To Be Considered Before Going For A Personal Loan:-

• Eligibility Criteria: A loan albeit easy to avail still requires certain criteria that an applicant needs to meet before he/she becomes a borrower. The applicant must be at least 18 years and at most 65 years to avail this loan in most banks and NBFCs. The applicant must either be a salaried individual or a self-employed individual(business professional). Joint applications are acceptable. The applicant must have been working for a minimum of 2years and at least one year with the current employer. If it is a business, the business should be running successfully for a minimum of 2 years. The bank or NBFC needs certain documents like ID proof, income proof, address proof, employment proof, bank statement to validate the eligibility.

• CIBIL Score: Credit Information Bureau (India) Limited (CIBIL) is a credit company that maintains the personal information, banking, and employment information in addition to the past credits(loans or debts) of individuals, companies, corporations, societies, and every other banking professionals. The report is summarized by a three-digit number known as credit or CIBIL score that plays a vital role in determining one’s eligibility to avail a loan. And for unsecured loans like personal loans, the score is a tad bit more essential. The number if above 700 is a good one and below 600 is a bad one. So check your CIBIL score and know if you can apply for Personal Loan and if so how much money can you apply for the loan.

• Principal Amount: The amount a bank or NBFC grants you a loan is the loan amount or principal amount. For a personal loan, the amount goes to a maximum of Rs 50 lakh in most banks and financial institutes. The loan amount depends greatly on the CIBIL score and your monthly income. A high income grants you more loan amount and vice-versa.

• Tenor: The tenor of the loan is the period you can avail the loan for. The tenor for a personal loan varies from 1 year to 5 years in most banks and NBFCs but some financiers offer more tenor than that. The repayment term should be carefully chosen. A long tenor usually means a low-interest amount each month till the end of a tenor but the total interest amount is more than a short tenor with high monthly instalments every month.

• Interest Amount: Equated Monthly Instalment(EMI) is the interest amount as a borrower you will be paying for the loan amount you availed till the end of the tenor. The personal loan interest rate varies from 7.5%-20% per annum depending on the loan amount, eligibility, CIBIL, tenor among others. Before availing the loan you should compare the interest rates from one financier to another carefully. And after availing the monthly instalments should be paid on time.

• Additional Charges: Banks and NBFCs charge additionally for the taxes, processing fee of the application among others. The processing fee is incurred for the approval and the processing of the application. It usually goes up to 2.50% of the loan amount. Therefore make sure that the lender you take the loan out on doesn’t bill you immensely. ICICI Personal loan is an illustrious loan with the most reputed offers and high-end customers availing loan without hesitation proving their trustworthiness day by day.

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