All About Personal Loan
Are you eligible for getting a Personal Loan from any financial institution? There are some Eligibility Criteria regulated by Banks to get a loan. You must be eligible if you want finance to meet your requirement.
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What is a Personal Loan?
Personal Loan is an unsecured kind of loan that provides financial help to the customers to fulfill their personal needs. The applicant is free to use this amount of loan anywhere in his personal life. There is no restriction on the use of loan amount. But to get a Loan the applicant should have a rigid income source and CIBIL score more than 700.
Why one should choose Personal Loan?
- Borrow a Loan amount up to Rs 15 lakhs.
- Less paperwork involved.
- Cheapest Interest rates.
- No security or Guarantee requirement.
- Instant approval within 48 hours.
- Flexible loan tenure from 12 to 60 months
Not everyone can get a loan. there are some criteria on the basis of them the bank provide a personal loan to the applicants. Let us discuss them.
There are two categories of applicants.
There are different criteria for both categories. Let us see both of them one by one.
- First of all the age of the applicant should be more than 21 years.
- After that he/she should be earning Rs. 18000 per month at least.
- After that, the applicant should have the work experience of 3 years at least.
- After that he/she should be getting the salary in his/her bank account.
- The credit history of the applicant should be good.
- If the applicant is self-employed than his/her age should be 25 years at least.
- He/she should be filing ITR for last three years at least.
- His/her CIBIL score should be good.
- The ITR should be of Rs. 2.5 Lakhs per annum at least.
It usually comes with an affordable interest rate. The starting interest rate of the Personal Loan is 10.75% per year; however, this rate keeps on changing time to time. Also, the interest rate varies from person to person. It depends on your monthly salary or income.
Who are eligible for Personal Loan?
Salaried, self-employed people and self-employed professionals are eligible for availing a personal loan.
- Salary: Rs 18,000 (Monthly)
- Minimum and Maximum Age: 21 and 60 Years.
- Work Experience: Overall 3 years and one year experience in the current job.
- CIBIL Score should be more than 700.
- A person getting a salary in cash is not eligible for availing Loan at affordable rates.
Self Employed Individuals:
- Min and Maximum Age: 25 and 65 years.
- An Annual ITR of 2.5 to 3 lakh is required.
- Residence: Office or Home should be owned.
- Business Stability: Your business should be running from last 3 years with continuous profit.
- Telephone / Mobile at the office: Mandatory.
- CIBIL Score should be more than 700.
There is a requirement of a few documents to apply for Loan. These are:
- One Identity Proof is needed to apply for a Personal Loan. Aadhar Card/ PAN Card/ Voter ID card/ Driving License/Passport.
- After that one proof of residence is required. Aadhar Card/ PAN Card/ Voter ID card/ Driving License/Passport/Rent Agreement/Water Bills/ Electricity Bills.
- One income proof is also required. You can provide salary slips of last 6 month or bank account statements where you get your salary. If you are self-employed you have to provide you ITR statement for the last three years.
- It is important to note that if you don’t get your salary in a bank account then you are not eligible to apply for a loan.
|CitizenShip/ PR||Indian||Same as Metro||Same as Metro||Same as Metro|
|Minimum Age||21 Yrs||Same as Metro||Same as Metro||Same as Metro|
|Maximum Age||58 / 60 Years at||Same as Metro||Same as Metro||Same as Metro|
|Experience||Overall 3 years||Same as Metro||Same as Metro||Same as Metro|
|Telephone / Mobile||Mandatory||Mandatory||Mandatory||Mandatory|
|Current Experience||One year||One Year||One Year||One Year|
|Salary in Cash||Not Applicable||Same as metro||Same as Metro||Same as metro|
|Self Employed People|
|Citizenship/PR||Indian||Same as Metro||Same as metro||Same as Metro|
|Minimum Age||25 /28 Yrs||Same as Metro||Same as metro||Same as Metro|
|Maximum Age||65 Year at the||Same as Metro||Same as metro||Same as Metro|
|ITR required||2.5 lakhs – 3.0 Lakh||Same as Metro||Same as metro||Same as Metro|
|Residence||Office or Home||Same as Metro||Same as metro||Same as Metro|
|should be Owned|
|Telephone / Mobile||Mandatory||Mandatory||Mandatory||Mandatory|
|Business Stability||Business Should be running||Same as Metro||Same As metro||Same as Metro|
|from last 3 years|
Special Note: Bank does not provide Personal Loan to poor credit holders. However; one can fulfill their financial requirement with a Gold Loan easily.
FAQs About Personal Loan
1. What is a personal loan?
The personal loan falls into the category of unsecured loan, that is, you do not need to provide any security in exchange for availing the loan. The loan amount can be used for any personal financial need like payment of bills, funding a family event or holiday, child’s education, home renovation, etc. The eligibility to avail a personal loan majorly depends on two factors, namely, CIBIL or credit score and your monthly income.
2. How does a personal loan work?
The personal loan works very similarly to any other loan product except for the fact that unlike most loans it is an unsecured loan thus, you are not required to submit any collateral or prime security with the lender. You can avail this loan to fulfill any personal financial need. Your eligibility, loan amount, and rate of interest are all dependent on your net monthly income, employer’s profile, and your credit history.
3. What is personal loan rate of interest?
Being an unsecured loan the rate of interest in personal loans is usually high. The lowest rate of interest available in the market starts at 10.50% per annum and can go as high as 26%-28% per annum. This rate of interest varies depending on factors like your monthly income, credit history, company’s status, relationship with the lender, and type of applicant (salaried or self-employed).
4. What is the procedure of personal loan?
Personal loan is a preferred choice amongst the borrowers because of its unsecured nature. If you meet the eligibility criteria you can easily avail quick financial help to fulfill all your personal needs.
- The first step is to make sure you meet the minimum eligibility criteria that includes having a good credit score, net monthly income above or equal to ₹15000, ready availability of documents such as PAN card, Aadhar Card, Bank Statements, Salary Slips, ITR files, and rental agreement if any.
- The next step is to submit your documents along with a filled in application form to your lender.
- Once your documents and eligibility are verified your loan process will start and you will be quoted with an interest rate and the loan amount that you can avail.
- Upon agreement the loan contract is signed and amount is transferred to your bank account.
5. How can I get personal loan?
If you meet the minimum eligibility criteria you can easily get a personal loan by visiting the nearest branch of the lender. You will need basic KYC documents and financial statements such as salary slip, ITR file, and bank statement of the last 6 months. Once your documents are verified and you reach an agreement with your lender the amount will be disbursed and transferred to your bank account. You can also apply with Dialabank to avail personalized assistance and make your loan process hassle-free.
6. How to apply for personal loan?
You can apply for a personal loan by visiting any of the lender’s nearest branch with your documents and an application form. Upon verification and confirmation of your eligibility, the loan process starts which can take anywhere between few hours to a couple of days for disbursement. You can also simply log on to Dialabank’s digital platform and apply online for hassle-free procedure and complete guidance and support.
7. Why apply for personal loan?
The first reason to apply for a personal loan would be its unsecured nature, that is, you are not required to submit any collateral or prime security in exchange for the loan. Another major reason is that the loan amount you receive in a personal loan can be used for any personal financial need be it payment of bills, consolidation of debts, home renovation, child’s education, a family vacation or event, or any other monetary emergency. A personal loan is a go-to financial help that can be used to fulfill all your financial needs.
8. Why take personal loan?
A personal loan is a one-stop solution for all your financial requirements. Take a personal loan when you are burdened with a number of bill payments or you wish to decorate and renovate your home. Take a personal loan if there’s an upcoming wedding or a need for lump sum money. Take a personal loan whenever and however a monetary need arises.
9. What is an EMI?
EMI, Equated Monthly Installments are a fixed monthly amount that a borrower needs to pay to their lender against the loan they have availed. This amount includes both your principal loan amount and interest payable. EMIs make the repayment of loan burden-free, easy, and efficient as you are only required to pay a minimum fixed amount each month instead of a lump sum amount at the end of tenure or as agreed.
10 What is a CIBIL score?
TransUnion CIBIL or simply CIBIL is India’s largest credit information company that basis your credit score on the CIR (Credit Information Report) that it receives from different banks and financial companies. CIBIL score has become synonyms with credit score in India and most of the lenders look at your CIBIL score before approving or rejecting your loan application.
11. What is a credit score?
A credit score is an estimated statistical number between the range of 300 and 900 that rates the creditworthiness of the individual on the basis of their past credit files. It is basically an estimate to determine whether or not you shall be given money.
A low credit score indicates that you have been irregular with your past repayments and have a higher risk to default the loan whereas a high credit score reflects your sincerity and ability to repay your loan on time. Your credit score is part of your loan eligibility and also the rate of interest offered to you varies accordingly. A good credit score can mean a lower rate of interest on your loans.
12. Why is credit score important in personal loan?
Your credit score is a financial report card that lets your lender know if you have been a good student or a bad one when it comes to repayment of your credits. Higher the score, the higher are your chances of getting your loan approved. Your credit score is an important factor in deciding your personal loan eligibility because it is unsecured in nature and your credit history is the only way for a lender to know if you will repay a loan or not.
13. How much credit score should I have for personal loan?
Credit score requirement for a personal loan can vary from lender to lender, but in general, a credit score in excess of 750 is considered good and will most likely be enough to get your loan application approved by your lender. The closer you are to the score of 900, the better it is.
14. Which bank is best for personal loan?
HDFC, ICICI, Citibank, SBI, and Yes Bank are some of the best banking companies to avail a personal loan from. Starting with quick disbursement, and easy documentation process, they all provide a personal loan with a rate of interest ranging between 10.50% and 11.25% per annum.
15. Which bank offers lowest rate for personal loan?
HDFC, ICICI, SBI, and Citibank are some of the finest banks that provide personal loans with the lowest interest rates that start from 10.50% per annum. You can simply visit Dialabank’s online platform to compare the latest rates of interest of all the leading banking and non-banking financial companies and apply for the ones that suit your needs.
16. How to calculate personal loan EMI?
Personal Loan EMI is the monthly fixed installment that has both the principal loan amount and the interest as payable. You will need three parameters to calculate your personal loan EMI, namely,
P – Principal loan amount,
R – Monthly rate of interest, and
N – Loan tenure in months.
The formula to calculate the EMI is E = P x R x [((1+R)^N)/((1+R)^N)-1]
17. What can I use a personal loan for?
A personal loan can be used for any and all of your personal financial needs. It could be bill payments, a family event, payment of any other loan, home renovation, financing your child’s education, and etc. You can visit Dialabank’s digital platform and learn more about personal loans and apply for the same by comparing offers from different banks and financing companies.
18. What is personal loan prepayment?
Prepayment refers to repaying your loan amount before the end of its tenure. Many lenders of personal loans allow their borrowers to repay their loans once they have paid a certain number of monthly installments or interest as payable. You might be charged with a repayment fee ranging between 2% to 5% of your outstanding principal amount depending on your lender. It is always advisable to negotiate the repayment terms with your lender before signing the loan agreement.
19. Can I prepay my personal loan?
Yes, you can prepay your personal loan provided that your lender allows for it. Your lender may charge a prepayment fee of about 2%-5% of the outstanding principal loan amount. The time period after which you are allowed to prepay your loan also varies with the lenders.
20. When can I prepay my personal loan?
Generally, lenders would want you to have made at least 12 monthly installments before they allow you to repay your loan amount. Depending on your loan tenure the time period for prepayment may also vary.
21. How to repay personal loan?
You can repay your personal loan amount through a number of online and offline options depending upon your lender. Generally, your lender will sign you up for an ECS and a monthly installment, EMI will be automatically deducted from your bank account. You can make payments via cheque, electronic fund transfer using NEFT/RTGS, or online through net banking, debit cards, UPI, and mobile banking apps.
22. How to repay personal loan online?
Many lenders provide online net banking facility for the repayment of your personal loan. In many cases, online repayment can also be made through debit cards, UPI, and mobile banking apps.
23. What is guarantor in personal loan?
A guarantor is a person that agrees to repay the loan on behalf of the borrower if the borrower fails to pay or defaults on the loan. As the personal loan is an unsecured loan adding a guarantor with a good credit history increases your chance of getting a loan approved. If you are thinking of being someone’s guarantor then make sure you are aware of the risks involved and have the ability to repay the loan if the primary borrower defaults.
24. What is co-applicant in personal loan?
A co-applicant is a person that becomes a borrower along with the primary borrower of the loan. The benefits of having a co-applicant are that the credit history and monthly income of the co-applicant are also taken into consideration for loan eligibility and the amount of loan to be disbursed. A co-applicant is different from a guarantor in the fact that a co-applicant is always liable to pay back the amount whereas for a guarantor to pay the applicant has to be proved a defaulter.
25. How to check personal loan status?
You can easily check your personal loan application status by visiting your lender and asking for the same with the concerned officer. Also, many banks and finance companies provide the facility to check the loan status on their online portal, making it convenient and easy to keep yourself updated with the status of your loan.
26 What is personal loan top up?
Top up is the additional loan amount that you can avail on your existing personal loan. If during your loan tenure you feel the need for more financial help you can always apply for a top-up on your existing loan. Your lender will look at your payment history up until now and if you have been regular with your EMI payments you will be allowed for a top-up and an additional fund will be transferred to your bank account. The same will also be adjusted in your current EMI scheme.
27 How to get personal loan top up?
To get a personal loan top up you can simply visit your lender’s branch and ask for a top-up. Your lender will dictate to you the terms and conditions and the new EMI scheme based on the top-up amount you have requested.
28 When can I get top up for personal loan?
Depending on your lender the conditions to avail a personal loan top up may vary. Most lenders would want you to have at least paid 6 to 12 EMIs before they allow you to apply for a top-up. The top-up amount and eligibility are decided on the basis of your consistency in the repayment of these last 6-12 EMIs.
29 What documents are needed for personal loan?
You will require to possess basic KYC documents for your identification and address verification purposes, along with these you will either require the last 3 months’ salary slip (for the salaried applicant) or 2 years’ ITR file (for self-employed) and 6 months’ bank statement. You will also need two passport-sized photographs.