FAQs on Personal Loans
What is a Personal loan?
A Personal Loan is an unsecured loan which is approved without any form of a security or collateral. That is you do not require using your house, property or assets as a guarantee to get the loan approved. Normally, the bank does not ask for guarantors either. Minimum documentation, swift approval and no probing on the purpose of Loan are the other benefits.
What can I use a Personal Loan for?
Personal Loans can be used for any purpose. No matter how big or small. Usually, people avail Personal Loans to fulfill personal needs ranging from as big as one’s wedding, to as tiny as buying a new laptop.
How do I apply for a Personal Loan?
Applying for loans is easy. You can easily apply for Personal Loans online after checking out various schemes on offer with different banks. Also, ensure to read the eligibility criteria and the documents required to submit before you apply.
How is my Personal Loan Eligibility determined?
Eligibility Criteria varies across different banks. Primarily, these criteria aim to acquire whether or not you are capable of paying the amount back. It is advisable you go through the eligibility criteria imposed by the bank you choose.
What is the maximum tenure of a personal loan?
Personal loans are intended to be short tenure loans. Most of the banks provide Personal Loans lasting 12 to 16 months.
How much is the maximum amount that I can avail?
This again varies across different banks. The basic factor though, is your ability to repay. The bank would like that the installment you pay should not exceed more than 30 to 40% of your income or 2-3 times of your income tax return. Please check under the Personal Loans section for details.
What are the fees and miscellaneous charges applicable and when are they payable?
Apart from the rate of interest banks usually charge fees of two types: Processing Fee and Prepayment Penalty. Processing Fee is paid when you apply for the loan while Prepayment Penalty is paid near to the end of the payback tenure. Both of them are charged at 2-3% of the loan amount.
What is the rate of interest that will be charged on my loan?
Various banks offer various Interest Rates and usually it ranges from 14%-26% depending upon your profile and the scheme you opt for.
How soon can I get my loan amount?
Usually banks approve Personal Loans within seven working days. However, delay or fault in documentation, especially the post dated cheques (PDCs), can lead to needless postponement. The amount is disbursed only after all the necessary documents have been verified.
Can I apply for loan, jointly with my spouse?
Yes. Personal Loans can be applied jointly. The co-applicant could either be your spouse or one of your parents. This helps in enhancing income eligibility, thereby allowing you to apply for a larger sum.
What are relationship discounts?
Banks offer relationship discounts to applicants having a personal account with them. These discounts are basically on the interest rates and the processing fee.
How do I repay my loan?
Before approving a Loan, Banks require you to submit Post Dated Cheques (PDCs) for each month during the payback tenure. The amount obviously equates to the EMI payable. The other option is ECS or Electronic Clearing System wherein, Banks deduct the EMI automatically from your linked account on a specific date each month.