Personal Loan

What Is Personal Loan ?

Personal loans are any purpose loans which are given without any collateral or guarantor. This is a very unique loan product wherein the borrower is at his/her discretion to do whatever they need. In other words, unlike a car loan or a housing loan, a personal loan can be used by the borrower for any of his/ her personal needs. There is no restriction for the usage of such loans though it should not be used for speculative purposes and investment in tax saving instruments. The loan can be repaid like all other loans through the equated monthly instalment -EMI (Use EMI Calculator) process where a fixed amount is paid each month.

Personal Loans has the following features:

They are provided without any specific purpose.
They are given without a collateral or guarantor.
They come at an attractive rate of interest.
They are relatively short term loans vis a vis other loans(i.e 3 to 5 years)
Personal Loan can get disbursed as fast as 24 hrs if the documents are in order.
Personal loans are currently offered from Rs 50,000 to Rs 50 Lakhs and are typically repaid in tenures ranging from 1 to 5 years.

Higher Loan Amount + Least Loan Tenure = Low Interest Amount

DOCUMENTS REQUIRED FOR PERSONAL LOAN:

THE GENERAL LIST FOR OBTAINING A PERSONAL LOAN ARE AS FOLLOWS:

Photograph
Identity proof
Address proof
Income proof
Bank Statements
Continuity Proof
Qualification proof( applicable only for Self Employed Professionals)

IDENTITY PROOF (ANY ONE OF THE FOLLOWING)

Copy of PAN Card
Copy of Passport
Copy of Driving Licence
Copy of Government ID card
Copy of Voter ID card
Copy of Company ID Card (for select Corporates)

ADDRESS PROOF (ANY ONE OF THE FOLLOWING)

Copy of Passport (Can also be used as proof of identity)
Copy of Telephone Bill (both landline and post paid mobile connection)
Copy of Driving licence
Copy of Voter ID card
Copy of Ration card
Copy of Electricity bill
Copy of bank statement ( computerised statements only)
Copy of Life Insurance premium receipt
Copy of any title deed( Sale deed/ Index II)
Copy of Property tax receipt
Copy of Leave & License Agreement
Copy of latest credit card statement

AGE PROOF (ANY ONE OF THE FOLLOWING)

Copy of PAN card
Copy of Passport
Copy of Birth Certificate issued by competent authority

SIGNATURE VERIFICATION PROOF ( ANY OF THE FOLLOWING)

Copy of PAN Card
Copy of Passport
Copy of Driving License
Signature verification from Bank

INCOME DOCUMENTS (ANY ONE OF THE FOLLOWING)

Copy of latest three salary slips
Copy of appointment letter or Form No. 16 indicating proof of continuity in employment
Bank statements for the last 3 months

For Self-employed Individuals :

Copy of last two year IT returns along with computation of income,
Balance sheet and Profit & Loss a/c , audited reports ( in case of audited financials)
CA certified financials ( in case of unaudited financials)
Bank statements of last six months of the main business banking

FAQS ON PERSONAL LOAN :

WHERE CAN I GET A PERSONAL LOAN FROM?

Personal Loans are offered by nationalized banks, private banks and a few Non Banking Finance Companies.

WHAT IS A PERSONAL LOAN?

Personal Loans are unsecured loan which does not require any security or collateral. It also does not require any guarantor.

WHO CAN APPLY FOR A PERSONAL LOAN?

Any individual who has got a source of income as salary or business income can apply for a personal loan.

WHAT IF A FEW EMIS ARE NOT PAID IN TIME?

It is in the interest of the borrower to repay all the EMIs as per schedule. Delay in payment of EMIs or default would badly affect the credibility of the borrower. Moreover getting a loan at a later stage would be difficult. Genrally banks share the credit history of a borrower with credit bueareu and in turn they share data of credit history of a boroower with other banks.

WHAT IF I WANT TO PREPAY MY PERSONAL LOAN?

Most banks allow its customers to prepay personal loans after 6 months of disbursement . Generally, banks charge a penalty as prepayment charges on the principal outstanding.

CAN I GET A REBATE ON THE INTEREST RATE & PROCESSING FEE?

Yes, a few banks offer special rates for those who have a relationship with their bank. The relation ship could be a bank account, exisiting loan, a credit card etc.

HOW MUCH TIME DOES IT TAKE TO GET A PERSONAL LOAN?

Generally it takes 1 to 3 working days to sanction a personal loan after completion of all formalities in terms of compliance in documentation.

WHAT IS THE RATE OF INTEREST THAT WILL BE CHARGED ON MY PERSONAL LOAN?

Rate of interest is a factor of prime lending rate (PLR) as announced by respective banks from time to time which varies with market conditions.

IS THERE ANY MORATORIUM PERIOD FOR REPAYING PERSONAL LOAN?

No, moratorium is not applicable for personal loans. Generally first EMI starts within 45 days of the disbursement of loan.

HOW DO I REPAY A PERSONAL LOAN?

Personal loans are generally repaid by way of equated monthly instalments( EMI)

IS THERE ANY FEE FOR AVAILING A PERSONAL LOAN?

Yes, you have to pay processing charges as decided by the bank from time to time.

WHAT IS THE MAXIMUM TENOR FOR A PERSONAL LOAN?

The tenor of personal loan ranges from 12 months to 60 months. However it should be noted that tenor is the discretion of the bank and also in most of the case, the tenor is restricted to 36 months.

IS THERE ANY SECURITY OR COLLATERAL FOR A PERSONAL LOAN?

Personal loans does not require any collateral or security. Exceptionally in some cases, a Co-applicant is required if certain norms are not met by the applicant.

WHEN CAN ONE APPLY FOR A PERSONAL LOAN?

You can apply for a personal loan in order to fulfill any of your personal needs which requires financial assistance . The loan can be used for buying a plot, wedding expenses, hospitalization expenses, holiday packages, buying jewellery, higher education etc.

WHAT IS THE MAXIMUM ONE CAN GET AS A PERSONAL LOAN?

Personal loans are available in the range of Rs. 50,000 to Rs. 50 lacs depending on the income eligibility of an applicant. However banks also have specially designed products to offer higher loans.