Earlier the people use to postpone their desires and wishes due to the shortage of money and wait till the time they accumulate the required amount. Till they use to arrange the funds, they lost the interest in the thing they desired earlier. This is because the pleasure derived by instant gratification cannot be received by delaying things. Also, the right things, done at right time reap good results. Therefore in today’s time, people do not leave things on time and spontaneously grab the opportunity by arranging financial credit. There are various types of loan products available in the market. But the loan that is sanctioned in the shortest time possible is a personal loan.
It is an unsecured loan the bank lends the loan after evaluating the repayment capacity of the individual. This value is determined by the bank on the basis of your income and savings. When a bank takes the time to evaluate your profile, you too should spare some time and compare personal loan interest rates. This will help you locate the lender that offers the credit at best pricing. Read the article below to know the necessary details about the product. Also, in the following section information about Personal loan provided by various banks is given.
Uses of Personal Loan-
The PL can be used for any purpose. There is no specified end usage of the amount disbursed under the personal loan. The borrower has the flexibility to use the loan amount in the way he/she wants. It could be used for any of the following purposes:
- Purchasing a car
- Paying off debt
- Buying furniture and fixtures
- Going on a tour
- Funding child’s education
- Organizing daughter’s wedding
- Accelerating business
- Renovating a house
Personal Loan Eligibility Criteria: To avail the benefits of personal loan the individual must meet the following parameters:
- Age - The minimum age of the applicant at the time application must be 21 years but not more the 60 years at the maturity of the loan.
- Employment Category - The loan is provided to the candidates employed in the legal entities or is self-employed.
- Income - The income of the applicant plays a pivotal role in deciding the disbursal amount and the eligibility of the candidate. The candidate must be earning a handsome salary in order to secure a loan.
- Work Experience - The candidate must have a minimum experience of 2 years in the line of business and should have stable job experience.
- Credit Score - The CIBIL report is the crucial factor that affects that decides whether the applicant is fit to give a loan or not. The idle score ranges from 350-900.
Factors Affecting Personal Loan Eligibility:
- Monthly Income - It is the basic factor that contributes in determining the loan amount the candidate is capable of receiving based on his repayment capacity.
- Age - The age of the applicant matters while accessing the profile of the candidate. The person belonging to the age group of 21 - 60 years can apply for the loan.
- Savings - Since the repayment will be made out of the savings, the lenders consider the amount an applicant is able to save after excluding all the expenses from the income.
- Any Other Running Credit - The running credit is also taken into consideration while computing the repayment capacity of the individual. If the applicant has the potential to repay both the loans simultaneously, the new loan is sanctioned.
- Credit History - It is important to have a clean debt record otherwise, it may hamper the loan eligibility of the candidate.
- Job Stability - The work experience and business continuity are important factors that contribute in enhancing the individual’s profile. The applicant must have been engaged in the line of occupation for a desirable period of time and should have a stable job.
Documents Required
Identity Proof - PAN Card/ Passport/ Election Card/ Photo Identity issued by Government, Defence Services, Public Sector undertaking/ Driving Licence/ Photo Credit Card/ Employee’s ID Card, Letter/card issued by UIDAI containing the details of name, photograph, address and Aadhaar number
Income Proof - Bank Statement for last 6 months, post dated cheques and electronic clearing mandates, legal documents as stipulated by the finance company, collateral security as advised by the finance company, any other document as advised by the finance company
Residence Proof - Bank Account Statement/ Latest Electricity Bill/ Latest Telephone Bill/ Latest Credit Card Bill/ Employer’s letter certifying current mailing address/Passport (valid)
Signature Verification- Valid Passport /Pan Card/ Processing Fee Cheque/ Banker's Verification Letter
Though the loan is taken in the times of great need but it is important to compare the lending rates offered by the various lenders to ensure that you don’t end up paying heavy interest. The interest rate offered by various banks are:
State Bank of India - SBI offers a personal loan to the salaried and pensioners under two different schemes namely, Xpress Credit and SBI pension loans. The rate of interest on the loan ranges from 12.45% p.a. to 14.90% p.a.
HDFC Bank - The HDFC Bank issues the personal loan only to the salaried individuals for meeting their personal expenses. The minimum age of the individual should be 21 years at the time of application and not more than 60 years at the expiration of the loan tenure. The rack interest of 15.75% p.a. to 20% p.a. is charged on the loan depending on the loan amount and tenure.
ICICI Bank - The bank provides the loan to the diverse needs of the customer. The loan is sanctioned for the highest tenure of 5 years and that too without providing any collateral or security. The interest is chargeable on monthly reducing balance. The nominal rate of interest starting from 11.59% p.a. is charged on the loan. However, it ranges up to 22% p.a. based on the individual’s profile. The loan amount is repayable in the form of easy installments.
Axis Bank - The applicant can avail a loan for the minimum amount of ₹ 50,000 and up to ₹ 15,00,000. The loan applicant can choose from the range of tenure varying between 1 year to 5 years. All the salaried employees within the age limit of 21 years to 60 years and earning at least ₹ 15,000 per month can apply for the personal loan. The interest rate of personal loan in Axis Bank begins from 15.50% p.a. and lasts up to 24% p.a.
It is always advisable to check the Personal loan interest rates before applying for the loan. This ensures that you get the loan at fair rates.
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