- May 31, 2020
- Posted by: Ganeshcbani
- Category: Blog
Do you find yourself looking for a way to get a personal loan but not sure where to start? Well, look no further! In this article, we will discuss the different types of personal loans and what type is best for you. Plus, we will also cover the process of getting approved for a personal loan online.
Different forms of Personal Loans
Your loan can be used for any reason as long as it is legal. However, some lenders provide different loan products for the purpose referred to in the online loan application by the borrower. Based on their use, these are the various forms of personal loans that can be used in Tamilnadu:
Personal loan for wedding: As the name suggests, a loan is a wedding loan that is offered in particular to meet the costs of a wedding.
Private home improvement loan: A house renovation loan has been used to finance the home repair or renovation costs.
Personal holiday loan: A holiday loan is designed especially for holidays. You can use a loan for your holiday and pay the costs in easy EMIs at a later date.
Private Pensioners Loan: A loan expressly made available to pensioners is referred to as a pension loan.
Private Festival Loan: Many lenders provide a personal loan for festivals exclusively. You should apply for a festival loan if you want a loan to plan a concert.
Good Cibil Score
The credit score is one of the key variables considered by lenders. For a good credit score, securing a personal loan is simpler. When your score is poor, the records will be reviewed to see if errors occur. Sometimes simple errors might have a negative impact on your scores and you have to report them to CIBIL if you find one.
Income and existing Debts
When applying for personal loans, the borrowers request proof of income to assess the debt-to-earnings ratio. Consider selling liquid assets such as stocks or earning more can part-time work to raise your annual income. This would increase your debt-to – income ratio and your chances of getting a loan.
If it is difficult for you to receive a personal loan on your own initiative, you can apply for one by adding a co-signer or guarantor. The person you choose must have a good credit score. Their main goal is to ensure that you repay the loan. However, if you can not do so, you will then be liable to repay the loan yourself. Choosing a person with a credit score of over 750 increases your chances of a personal loan significantly.
Decide how much to Borrow?
You can risk asking for more money than you need to achieve your financial goals. Make sure you determine how much you need and apply for that particular amount only.
Choose the right loan: Each lender has its own loan and income criteria. Select a lender whose eligibility requirements you meet and apply accordingly when applying for online personal loans. The problem with applying to multiple lenders is that each of them tests your credit score and, when your credit report is full, your credit score falls, albeit slightly.
Pre-payment and part of personal loan payment
A personal loan is granted for a defined period of time. That time is known as the term for loan repayment. Upon taking a loan, you are required to pay off the debt by EMIs before the completion of the loan repayment period. And, if you use a loan, it is called pre-payment or bankruptcy if you want to pay off your debt before the completion of your repayment period.
There are 2 pre-payment forms. It is – full advance payment and partial advance payment or just partial payment.
Total Advance Payment
If you pay out the entire amount of the loan before the end of the loan repayment period, it is known as the entire advance payment.
Benefits of complete advance payment:
You will stop charging high interest on the amount of your loan.
When you have the money to pay off all of your loans, you might even get rid of your loans.
If you take the loan from the lender who does not charge interest on pre-payment of the loan, you can avoid pre-payment interest.
Total Pre-Payment Disadvantages:
If your lender charges a penalty when you pay the loan amount beforehand, you might have to pay a large amount of money to pay the loan before you pay.
Check other related factors before you foreclose a loan. If you expect a personal loan, you will pay a large sum of money at once. Perhaps this is not always the best choice.
2. Pre-payment part:
When you pay a percentage of the unpaid debt before the expiration of the debt repayment period, it is considered to be partially prepaid.
Benefits of pre-payment part:
You can agree to pay a portion of your unpaid loan if you have any money readily available.
The value of the remaining capital that is paid in part would reduce the total EMI value.
The net interest you pay would therefore dramatically decrease.
Pre-payment portion disadvantages:
You would not be able to optimize your savings if you do not pay the part early enough.
If your lender charges a partial payment fee on personal loans, you will have to spend a substantial amount on them.
Documents needed for applying Personal Loan
Identity Proof -PAN Card/ Voter’s ID/ Aadhaar Card/ Passport/ Driving License
Address proof- Bank Account Statement/ Aadhaar Card/ Lease/ Property purchase Agreement/ Utility Bill (not more than 3 months old)/ Passport/ Driving License
For Salaried Individuals: Salary Slip/ Bank Account Statement/ Form 16
For Self Employed: Previous Year ITR/ P&L Statement and Balance Sheet/ Bank Account Statement
Business proof : Certificate of Practice/ Partnership Deed/ GST Registration and Filing Documents/ MOA & AOA/ Shop Act License
If you are looking to take on a personal loan, but don’t want to deal with the hassles of paperwork or waiting for an approval, there are plenty of online lenders that offer loans without any such requirements. All you need is a valid credit score and some good income documentation. With so many lenders available these days, it’s easy to find one that suits your needs and finances.