What is personal loan
This is the loan which is offered by the bank to the applicant without any security. Before granting the loan, bank takes into consideration many factors which should be fulfilled by the applicant. Personal loan is always a better option than to borrow money from the credit which are far expensive. To avail a personal loan it is mandatory that you should have good credit record and also have a fixed income of at least 3 lakhs. As, to give loan without any security is always risky for the bank so it ensures completely that applicant will pay back the money.
Process of availing personal loan
After you have decided to avail personal loan then next step is to learn about how to take personal loan? Here I am giving you the stepwise procedure of taking personal loan.
1. First step to take the personal loan is the selection of bank. You can select the best bank on the basis of the following criteria.
a) Interest rates- This is the primary criterion for selecting the bank for your loan. Always go for that bank which offers minimum interest rate on the loan.
b) Compare the EMIs- EMI are equated monthly installments which is computed on the basis of your principle amount of loan. Select the bank which offers you the facility of EMIs according to your monthly budget.
c) Check your eligibility before applying- All banks have different eligibility criteria for granting the personal loan. Always go with the bank which suits to your eligibility.
d) Other offers on personal loan- Sometimes to attract the customers, banks offer many offers. Ask the bank if there any personal loan offer present.
e) Check other charges charged by the bank- before applying to the personal loan you must check other charges for various formalities of availing personal loan. Main charges include processing fees, prepayment penalties and documentation fees. Go with the bank which charges lowest fee for the same.
2. After the selection of the bank, next step is to apply for the personal loan with all your documents. Make sure that you are providing the right and true information to the bank. Documents required for personal loan are very less as compared to car loan or home loan. Generally, a bank requires following set of documents for personal loan.
a) Your identity proof which can be your voter card, driving license, employer identity card or similar to them.
b) Your residence proof.
c) Your last 6 bank statements.
d) A guarantor with same documents as stated above.
3. After submitting your documents, bank's agent verifies all your documents. Agent makes the entire necessary query regarding your documents.
4. After ensuring that all the information provided by you to the bank is true and you meet all the eligibility criteria for having personal loan, bank disbursed the sanctioned amount to you either through check or demand draft.
Benefits of personal loan
There are certain advantages of personal loan which makes it loan of choice for many people. Here I am discussing all the possible merits of personal loan in detail.
1. No need of any security- The most peculiar advantage of this loan is that it doesn't requires any security. If you are applying for personal loan then bank will never ask you for any security or collateral.
2. Easy documentation of personal loan- The paper work of this loan is less tedious and which makes possible to avail it very fast. Banks ask for the minimum documents to grant this loan.
3. You don't have to disclose the use of your loan- Unlike other loans where you have to specify the purpose of loan; here you don't have to tell to the bank that for what purpose you are taking the loan.
4. Lesser interest rate than credit card- The interest rate for this loan is far less than the amount borrowed from the credit card.
5. You can take heavy loan amount- depending on your capabilities, bank offers you loan amount for Rs. 50 thousand to Rs. 20 lakhs.
Demerits of personal loan
Although personal loan offers so many advantages but there are certain disadvantages of personal loan too. Let's have a look on the various demerits of this loan.
1. As compared to home loan or gold loan, interest rates are very high. So, my advice is if you are in need of fast cash then give a thought on gold loan first.
2. Also for personal loans, it is required that you should have a gross income of at least 3 lakhs. So if your income is less than 3 lakhs then you have to search for other options for loan.
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