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Many banks and financial institutions offer a personal loan without the requirement of collateral being used as the security for the loan. These loans are unsecured, so the rate of interest for these loans is usually high compared with other loan schemes. Several banks charge fees for personal loans and The money borrowed by the applicant must be paid overtime and typically with interest.

Personal Loan eligibility and EMI calculators are available online to check one’s ability and probability of approval in the selection process. The EMI calculators can help in estimating the amount that needs to be paid by a person based on details like tenure of the loan, loan amount that needs to be borrowed, and rate of interest charged by the lending bank.

Where you can find personal loans?

You can apply for a personal loan from your current bank and credit unions. You can also apply for a loan online as many lenders provide loans through online mediums. If you apply for the personal loan through online mode then you get a decision in few minutes and, in some cases, get funding in as little as 24 to 48 hours after your loan gets approved from the Bank.

It has become easy to apply for Loans nowadays, Several options are available for the application process of loans. These options can be discovered through both online and offline modes. Applicants should pay attention while comparing the loan schemes especially online. Some factors affect the loan application for a Personal Loan.

Here are few things that should be considered before the application process of a personal loan-

1. The rate of Interest rate.
2. Fees charged by the lending bank.
3. Repayment terms offered by the lending bank.
4. Borrowing limits (minimum and maximum) offered by the lending bank.
5. The requirement of collateral (if any).

Eligibility criteria

The personal loan amount that you get from the lender depends on your salary, age and city of residence, and other eligibility criteria. Few extra criteria can be imposed as per the guidelines of the Bank or the financial institution. Rate of interest on personal loans also varies according to the Bank you wish to apply for the Personal Loan.

How you can qualify for a personal loan in India?

1. You should be a residing citizen of India then only you can apply for a personal loan.
2. Your age should between 23 to 55 years to apply for a personal loan.
3. You should be self-employed or employed by a government or private limited company.

Some of the popular bank schemes for personal loans offered in India are as follows 

1. State bank of India personal loan schemes.
2. Bank of India personal loan schemes.
3. Bank of Baroda personal loan schemes Axis Bank Personal Loan schemes.
4. HDFC Personal Loan schemes.
5. Punjab national bank personal loan schemes.
6. ICICI Bank personal loan schemes.

Documents required for personal loans

1. Identity proof (copy of passport/voter ID card/driving license/Aadhaar) of the applicant.
2. Address proof (copy of passport/voter ID card/driving license/Aadhaar) of the applicant.
3. Bank statement of previous 3 months (Passbook of previous 6 months) of the applicant.
4. Two latest salary slips/current dated salary certificates with the latest Form 16 of the applicant.
5. Few Passport sized photographs of the applicants.
6. Documents of employment of the applicant.
7. Credit Score of the applicant.

Some Banks demand few extra documents according to the policies and guidelines of the bank. The Loan gets approved by Bank or the financial institution within 7-15 days after the verification process of the application is completed. Follow the required steps, submit the required documents, and wait for the verification and approval notification from the bank. The loan amount after being sanctioned by the lending bank gets transferred to the Bank account of the borrower with few days from the date of approval.

Also read this: How To Estimate Repayment Of Debt In Personal Loan 

A few important things one must consider before applying for a personal loan

Method of Interest Computation - The interest calculation method influences the rate of interest charged by the bank on the amount loaned. Interest on personal Loans is calculated by two methods - the reducing balance method and the fixed-rate method Generally, the interest paid by the borrower is lower when the interest is calculated by the reducing balance method and when the rate of reducing balance method and fixed-rate method is alike.

Interest Rate - The Personal loan interest rate dictates the amount that one has to pay in addition to the loan principal over the repayment term. The best personal loan from the borrower’s point of view would offer the lowest rate of interest. The best bet, in this case, would be to approach a reputed bank but it is also vital to compare the interest rates offered by various banks as the rate of interest differs in each bank. The rate of interest would also be subjective to the borrower’s income.

Processing fees - Processing fees are charged when the loan is disbursed to the borrower. Processing fees added to the interest rate determines the total loan amount hence lower the processing fees, the better it is for the borrower.

Part prepayment and foreclosure - An optimal personal loan should provide the borrower with the option of part prepayment or foreclosure of the loan before the end decided due date at minimum extra cost. These options allow the borrower to save on the interest amount paid by them, hence saving them money.

Flexible repayment structure - Generally, personal loans have a flexible payment structure that varies from 12 to 60 months. It allows the borrowers to repay through equated monthly installments (EMI), which allows a reduced impact on the budget of the borrower.

Tenure - The borrower needs to consider the duration of the loan. The borrower should opt for a bank that provides flexibility in the tenure. The perfect loan is the one that meets the time requirement of the borrower.

Should be easy to obtain - Personal loans can be obtained through simple documentation and disbursed quickly by banks, hence helping the urgent financial requirements of the borrower. Online facilities provided by banks such as Vijaya Bank Personal Loan it convenient for borrowers to apply for the loan, verify their documents and obtain approval for the loan.

Take a loan only when it is crucial - A personal loan should only be taken after a thorough assessment of the loan requirement and repayment capabilities. It is important to consider not only the short term but also the long term goals, before applying for a loan.

Thorough research - It is important to do thorough research of the banks and other financial institutions, and the various schemes and policies provided by them. Only after complete research, one should finalize from where they would take the loan.

Consideration of such factors would help an individual to get the perfect loan.

Factors that affect personal loan eligibility 

Income - The stability of income of the borrower impacts their loan eligibility.

Credit score - The borrower needs to have a high credit score to qualify for a loan. A credit score of 750 and above is recommended.

Housing situation - Having your own house improves the chances of the loan being improved because the repayment capacity increases. While living in a rented house negatively affects the repayment capacity.

Other factors - Factors such as residing location, the company where the borrower is working, existing debts also impact the eligibility criteria.

Documents required to apply for a personal loan -

The borrower should be able to produce -
1.Proof of identity.
2.Proof of residence.
3.Proof of income.
Documents such as an Aadhar card, pan card, passport, driving license, etc. can be used for this purpose. The borrower also has to present lender-specific forms as well as passport-size photographs.

Read More:- What A Personal Loan Costs You