Loans exist in a wide variety of forms like gold loans, home loans, car loans etc. and these loans differ in their respective interest rates and repayment terms. Probably, the simplest type of loan available to an individual according to his/her needs is a personal loan. For personal loans, you don’t require to provide any collateral to the lender. You can simply apply for a personal loan online and get the fund. Today, most lenders have websites on which customers can avail of personal loans. One reason to obtain personal loans online is you don’t have to stand in the never-ending queues. Now, different financial institutions provide different interest rates on personal loans. It is on your part to decide which one suits your needs. Before getting into the application process for a personal loan, let’s understand what is a personal loan?
What is a personal loan?
A Personal Loan is a debt that a person takes from a lender like banks or financial institutions for fulfilling some personal obligations of an immediate nature. The obligations are not limited to a single thing and may consist of a range of needs like planning a vacation, organizing your child’s destination wedding, buying your dream car etc.
Why are personal loans beneficial to an individual?
A Personal Loan is significant in today’s fast-moving world due to the following advantages:
- They do not require many documents, unlike other types of loans like home loans or gold loans, and they get quick approval as well.
- as various institutions provide personal loan services online, once you assure the lender of your loan repayment capacity, it disburses the loan within a few hours of application.
- Another major benefit is that the borrower may choose his/her repayment tenure. The tenure of a personal loan is one to five years and the lenders also exercise flexibility while extending it to the borrower based on his/her repayment capacity.
Ways of applying for a personal loan
There are generally two ways of applying for a personal loan- online and offline.
To apply for a personal loan in online mode, you need to follow these easy steps:
- Use your prudence and carefully find out the exact amount of loan that you need for fulfilling your financial needs.
- Bear in mind any existing credit card or loan that you may be paying off currently.
- Use an online EMI calculator to calculate the monthly payments amount, repayment tenure, processing charges etc.
- First, you need to visit the lender’s website, go to the “products” menu and select the “personal loan” option.
- Then you need to fill up an application form.
- In this form, you need to provide necessary details like your full name, address, etc. Also, along with the form, the lender might ask you to provide necessary documents including your bank statements, ID Proof, etc.
- The lender will then verify your details.
- If you meet all the criteria that the lender asks for, a representative of the bank or NBFC will get in touch with you via phone call, SMS or email.
- After the communication with the representative, if the lender finds you capable of repaying the loan, then you get the fund.
In the offline mode, the process is almost the same except you need to visit your nearest lender’s branch from which you want to take the loan. Other than that, for personal loan offline mode also you have to go through all the other steps mentioned above.
Documents to be submitted while applying for a personal loan
While applying for a personal loan, you need to submit these KYC documents including:
- Aadhaar Card, Passport, Driving License, Voter’s ID. These serve as Identity Proof for the customer.
- PAN Card.
- Last six months’ bank statements.
- Utility bill, ration card, Aadhaar Card, etc. These documents serve as your Address Proof.
- Form 16 and last three months’ salary slips (for salaried persons)
- And for self-employed individuals, TDS Certificate, last two years’ balance sheets, etc. serve as documents.
Eligibility criteria for personal loans
When you apply for a personal loan at any financial institution, you need to meet certain qualifying conditions that the lender sets. These conditions include:
- People who wish to avail of personal loans must not be more than 65 years old.
- Borrowers should earn twenty-five thousand rupees and more to secure a personal loan.
- Individuals should have a working experience of more than a year to qualify for this loan.
Now that we know all about personal loans, applying for a personal loan online is a comparatively easier process today as the borrower does not have to go through too much documentation and hassle to procure a personal loan for his/her needs. The borrower also gets the loan amount readily and shortly in his bank account within a matter of a few hours or minutes.
