A Personal Loan

Unsecured Personal Loan

A personal loan is money that you purchase for almost any reason, including debt repayment, unforeseen medical bill, new furniture, holiday or even student loan. In monthly payments over time , typically two to five years, you pay the money back — plus interest — Most personal loans are unsecured, meaning they ‘re not guaranteed by collateral.

You pay an annual percentage rate (APR) of interest. The average Interest for a personal loans is 9.41 percent in June 2019, but depending on your creditworthiness, it can vary from 6 percent to 3 6 percent, including a analysis of your profits, liabilities and credit.1 2

Characteristics and Benefits

You must be at least 21 years old and have a valid set of documents including ID, proof of income and residence, among other documents, to take advantage of a personal loan from banks.

In order to ease the burden of immediately paying the personal loan, you can opt for the EMI facility. The repayment duration will vary from 12 to 60 months. If you are a customer of any private Bank, you can take advantage of the best prices for personal loans!

A personal loan calculator is available to know how much you have to pay per month. You can select your tenure and the amount you will be able to repay for the tenure you have selected every month. You can also measure the compound interest with the EMI personal loan calculator and you know exactly how much you will eventually part-including the interest.

Eligibility of Applying Personal Loan

What is the minimum and average personal loan tenure?

These are generally taken for a short period. The term of the loan is usually between 12 months and 60 months.

What are the personal loan charges?

In addition to the interest rate, banks bill two personal loans for the following costs.

Processing fee:

When you apply for a loan this fee is paid. The cost for processing will vary from 2-3 percent of the loan amount and can be reduced if you negotiate. It also helps if, during our dealings with the bank in your name, you approach the bank through the online marketplace and offer attractive cash back on sanctioned loans. Often we may also give our valued customers exclusive loan schemes on behalf of banks, such as zero transaction fees.

Pre-closure fee:

This fee is paid if you plan to close your loan before your term is completed. Banks charge this premium to cover the loss that they will suffer because of the premature closing of a fixed rate loan. The prepaid penalty can be up to 5% of the loan. You must read your loan agreement’s terms and conditions carefully to review the prepaid clause and make sure it is not too strict in relation to market benchmarks. Banks are also open to review the prepayment clauses if the borrower or his loan representative is negotiated and discussed.

What is the CIBIL personal loan score?

The score for CIBIL ranges from 300 to 900. A score of 750 and higher is known as a good result for personal loans. Improved interest rates, improved chances of gaining approval for a loan application.

Do I have to open my personal loan on a bank account?

Yeah, at least one functioning bank account must be on your behalf. It’s even easier if you have an account with the same bank that you want a loan from.

May I apply together with my spouse for a personal loan?

Yes, you can apply together (either your spouse or parents) with a co-applicant. This helps you increase your eligibility and you can also use a greater amount of loans as the income of your co-candidate is also applied to your income and that amount is taken into account to determine the amount of loans for which you are eligible.

Does it impact my co-applicant by my personal loan default?

Yeah, if you don’t pay the loan on time, your co-applicant will also be affected because the default on the loan will affect its CIBIL value.

What are the main factors affecting personal loan interest rates?

Since these are unsecured loans, the interest rate is higher. The interest rates on personal loans vary by loan amount, company category and net income. You can lend high loans at a low interest rate with high profits and a strong company profile. Personal loan rates for government and defense workers can vary from those of employees with private salaries.

May I pass the balance of personal loans?

Yeah, you can apply for personal loan balance transfers if you earn a higher interest rate and pay higher EMI than other banks and reduce your monthly load.

May I update my personal loan?

Yeah, you can get an additional loan, but bank by bank terms and conditions differ.

How can I prevent my personal loan application from being rejected?

Banks or NBFCs lend to those lenders who are likely to repay the loan. If you don’t want your application denied, you need to know few details:

In this scenario, when you have a partner who also works, you should add her to the joint income as a co-candidate.

First, clear your old debts and reduce your leverage.

You can also move your current loans to balance so that the interest rate on the loans can be reduced and new loans can be used.

If your loan application is denied because of a low CIBIL rating, you can apply for loans that do not need a CIBIL check. Regular track records of repayment for these loans can actually improve your CIBIL score. You may also choose to take a loan from lenders who lend a lower CIBIL score to borrowers. The interest rate offered by these lenders is however generally higher than that offered by banks.

Can I pay the loan amount if I’m outside India?

Sure, payments from outside India can be made through banks’ net-bank or online banking services.

Can I get a pensioner’s personal loan if I have a pension account with one of India’s leading private banks?

There are several banks, both private and public, offering loans to retirees. You can obtain loans up to 10-20 times the monthly pension.

What are the advantages of partial loan payment?

Part prepayment helps you to use any excess income to repay your loan and thereby raising your fixed expenses burden. It also enables you to reduce the total interest cost of a loan by reducing either your EMI or your loan tenure. After a few initial months, banks make prepaid and mortgage payments. However, because personal loans are fixed-rate loans, banks usually charge a 2-5% pre-paid principal penalty. It is necessary to consider the cost consequences of pre-payment before taking a loan and before making a pre-payment decision.

Can I get a bad credit score for a personal loan?

Yeah, even with a low CIBIL score, you can qualify for a personal loan. However, lenders will charge a higher interest rate on their loans and require you to apply for credit along with a co-applicant to increase your credit worth.

What are the tax advantages for personal loans?

Personal loans do not have explicit tax advantages, but you can sometimes get a tax exemption based on your personal loan purpose. You can be eligible for a deduction from the Income Tax under section 24 of the Income Tax Act if you are taking a personal loan for home renovation and/or down payment. This tax gain is only valid on interest charged on the loan, not on the principal sum. Likewise, if you have taken a personal loan to cover your business expenses, you will claim against the taxable income interest accrued on these loans, minimizing the tax liabilities.