Guide For A Personal Loan

The pandemic has affected our economy badly. It is one of the most deadly pandemics after the Great Influenza pandemic of 1918-1919. It was the worst natural disaster in US history, with an estimated 675,000 deaths. And during these challenging times, the only hope that people have is loans. 

What is a Personal Loan? 

It is an unsecured loan that is used by individuals to get instant fund assistance. You don't have to pledge any asset as collateral to get funds from this loan. Many banks and NBFCs (Non-Banking Financial Companies) provide the facility of personal loans. Personal loans have relatively low interest rates than other types of borrowing. There are a lot of benefits that you can get from applying for a personal loan. 

Some of the common benefits are: 

1) Hassle-free processing:- The entire personal loan process is speedy and hassle-free. The process will only take 2 to 5 days to get processed. A lot of banks will approve your application quickly if you have a high credit score. 

2) Unsecured:- Personal loan is an unsecured loan. So you don't have to pledge any assets to get funds from this loan. 

3) Flexibility:- Customers have the flexibility to use the funds they get through this loan freely. Banks don't monitor the end usage of the fund. So you can use the funds for various purposes. 

4) Credit Score:- If you're someone who has a bad credit score, then you can use this loan as an opportunity to increase your credit score by paying the instalments on time. 

5) Documentation:- The entire documentation process of a personal loan is very quick and easy. You'll have to attach the application form along with some essential KYC documents required for verification. Unlike any other loan, you don't have to submit a bundle of paperwork to get your loan approved. 

Essential factors of Personal Loan

1) Credit Scores:- It is a three-digit number that will determine your creditworthiness. A lot of banks will use your credit score as a primary criterion to accept your application process. A high credit score can help you to get a lot of benefits. Your credit score will be a factor to build trust between you and your lender. 

2) Employment:- Personal loans only accept the application of employed individuals. So you'll have to be employed in order to get your loan approved. Your employment status will play a significant role in determining your loan approval. A work experience of a minimum of one year in your profession is required. 

3) Income:- A minimum income of INR 10,000 is required to get your loan approved. Your income will also plays a vital role in determining your application approval. If you're applying for a high loan amount, then you should have an income capacity to repay the loan amount. So be sure to check your income before making a decision regarding the loan amount. You can use some online tools like the personal loan calculator at HDFC Bank.

The personal loan application process

1) Firstly you'll have to apply for a personal loan facility. You can use either online instant personal loans or offline methods.

2) You'll have to fill the entire application form. Complete all the necessary details required by the bank. 

3) Then you'll have to submit some essential KYC documents along with some documents like: 

a) Address proof - Banks will ask you for address proof like Electricity Bill, Telephone Bill, Postpaid Bills, etc.

b) Income proof - Payslip, Form 16, ITR, Tax Challan, etc.

c) Employment status - You'll have to show a confirmation of your employment. For that, you'll have to submit an Employer Certificate, Offer Letter, Certificate of Experience, etc.

d) Identity proof - An identity proof like Aadhar Card, Pan Card, Passport or Driving License.

4) After you've submitted all the documents, the bank will verify your documents to check whether or not the application should be approved. 

5) Once the bank approves your application, the loan amount will be instantly disbursed to the borrower's bank account. 

This entire process of personal loan will take 2 to 5 business days. A lot of banks provide the facility of personal loans. To compare all the options and then choose an ideal bank for a personal loan. 

Must Read:- Which bank should I choose to apply for a personal loan?