Personal Loan India » Personal Loan Guide
Personal Loan Guide
The content on this page will give you able guidance regarding a few important aspects of personal loans.
A Few Pointers Before You Decide To Go For Personal Loans:
» First up, you need to be very clear about the kind of Personal Loan amount that you want to borrow through the bank. Moreover, always remember to consider the Personal Loan as a last resort.
» Draw out a list of banks that offer Personal Loans and shortlist a few amongst those.
» Once you shortlist a few names, visit the nearest branches of those banks and seek more information on the personal loans on offer. Also, read the fine print of the Terms and Conditions of these loans.
» Get a fair idea of the loan amount that you will get and the interest rates and other ancillary charges therein.
» Once you decide to choose a particular personal loan, you will be required to submit documents for the approval of the loan.
» The disbursement of the loan amount takes place after the approval.
A Few Eligibility Conditions
Personal Loans are by far the easiest loans to get. However, there are a few eligibility conditions for the same and what's more they are only offered to resident individuals.
» The minimum age limit for a personal loan is 25 and the maximum age is 65. Also the age limit is used to confirm whether the person is going to work and earn during the duration of the loan.
» There is a minimum salary requirement designated by the banks; which offers estimates of the prospective borrower's ability to repay the loan.
» The banks will also take cognizance of the number of years that you have spent in a particular job or profession which essentially ensures the stability factor that a person has vis-à-vis his job, profession and associated earnings.
» A person has to spend a minimum number of years in his/her residence; this factor decides the intention of person to stay in the same City over the tenure of the Personal Loan
There are a number of professions that require the person to travel abroad on a frequent basis, herein, they will be offered a personal loan but for such professionals, banks usually ask for a guarantor.
Checklist for a Borrower
We have already told you about few of the eligibility criteria for a personal loan. Here, is a checklist that you can go through to make sure that you have not missed anything of importance.
For Identify Proof
The following are documents that you can submit for proof of identity:
» Passport - Also Used as Proof of Address
» Government Identity Card
» Voter's Identity Card
» Photo PAN Card
» Driving License
» 'Defense' Identity Card
» Passport Sized Photographs also need to be submitted along with the application.
Proof of Address
The following are documents that you can submit for proof of address:
» Telephone Bill
» Electricity Bill
» Post Paid Mobile Bill
» Property Tax Receipt
» Passport
...And Many More
Proof of Age
» Voter's Identity Card
» Ration Card
» Birth Certificate
» School Leaving Certificate
» Passport, Defense ID Card
....And there are various others as well
The Income Documentation
» Latest salary slip, which also offers a detailed info about the statutory deductions
» Proof of employment and continuity
» Form 16
» Appointment Letter
» Latest IT returns
» Banks Statement, more often than not, of the last 3 months
Income Documentation for Self - Employed Individuals
» A C.A. certified computation of the income earned by the individual for the last two years.
» Another option is to submit a Profit and Loss Balance Sheet that has been certified by a C.A.
» Acknowledged IT returns copies of the last two years
» Banks Statements for the last six months
Many a times, a combination of most of these documents are required by the bank. Therefore, it makes sense to be prepared and have them on hand.
A Few Cautionary Pointers
» We have mentioned earlier that a personal loan should be looked at as the last option. Therefore, you must choose the right home loan for your needs. Spend considerable time going through the ins and outs of the Personal Loan process.
» The tenure of the personal loan should match your requirement. Do not, for any reason, commit yourself to making extra repayments, which will adversely affect your existing daily expenses. In Personal Loans, the option of paying them off, as early as possible might not necessarily be the right option.
» There are always various discounts on offer. You must make sure that you make use of such discounts and benefits that are usually offered by banks.
» The repayment schedule of the personal loans must be a reflection of your needs and requirements. You can choose to go for step up EMIs (increasing your EMIs gradually) or go for the step down option, wherein, you can make larger payments upfront.
At the end of the day, it's of great import that you select the best product for your needs and requirements. Some of the parameters that define a good personal loan are:
» The loan amount being sanctioned
» The interest rate of the personal loan
» The amount of other charges being leveled by the lender
After Owning the Personal Loan
You are not home-free after you get the designated loan amount. There are again a few pointers that you must take care of, after you are allotted a loan.
» Do not default on your payments
» If you default, your credit history will go for a toss and in today's times a credit history of a person is shared across banks
» Avoid delay in payments as they attract very strong penalties and thus the overall cost of your loan will increase
» Always make sure that you, as a customer, understand the fine print. Charges cannot be leveled without you being informed. If you find that this has been the case then you can report any such discrepancies to the Banking Ombudsman of your State that has been appointed by the RBI.