For Personal Loan : Personal loan is given to salaried people. Self employed and self employed professionals may apply for business loan.
For Business Loan : Business loan is given to self employed and self employed professionals.
Personal loan is a short to medium tenure loan taken for any kind of personal reasons like renovation of your house, wedding, taking a new phone, vacation, pay off other debts, meet business requirements etc. A personal loan is an unsecured loan, which means that the applicant does not have to provide any security. Documentation required in case of applying for a personal loan is also very minimal and its approval depends mostly on the credit score of the person, his/her relationship with the bank.
Personal Loan Eligibility
Eligibility to apply for a personal loan depends on factors like age, monthly salary, ability to repay the loan, credit score of the person etc.
Minimum age of the applicant must be 21 years(though it differs for each bank).
Minimum monthly salary required is Rs. 18,500 in metro cities and Rs. 12,500 in other cities.
Age of the person should not be more than 60 years at loan maturity.
The credit score of the applicant should meet the minimum requirement, usually it is 750.
The following are the documents required by most of the banks or non-banking financial organizations:
- Age proof
- Identity proof
- Residential proof
- Salary proof/ income proof
- Application form
- Passport size photographs
- Loan agreement
Some important points to remember when applying for a personal loan
Take personal loan only in emergencies: A person should take a personal loan only in situations like medical emergencies, home renovations etc not for vacations or buying things you don’t really need.
Research before you apply: Before applying for a personal loan,it is necessary to decide from where should you take the loan. All the banks charge a different interest rate on the loans. So it is better to first research which bank provides you personal loan at an interest rate that suits you.
Calculate the EMIs: By comparing the interest rates of different banks, calculate the EMIs as per the principal loan amount, interest rates and also the tenure for which you want to take the loan.
Make sure you can pay the EMIs: It is important to make sure that you can repay the loan in regular installments. If the applicant has taken loans earlier which are not yet completely repaid, EMIs of those loans also should be taken into consideration while deciding the capability to repay the loan.
Check credit score: Before applying for the loan, an applicant should check that his/her credit score meets the minimum requirement fixed by the bank.
Bargain: If an applicant has a good credit score and he maintains good relationship with the bank, it is possible for him to bargain to get a loan at a lower interest rate.
Don’t take too many personal loans: Taking a large number of personal loan may reflect badly in the applicant’s credit history which will cause problems in future.
Keep it as short as possible: It is better to keep the tenure of the personal loan as short as possible. Doing this will reduce the interest amount to be paid and also improve the credit score and credit history of the applicant.
Type of interest rate: There are two types of interest rates – flat or reducing balance rates. When an applicant applies for the personal loan, he should compare both types of interest rate and on the basis of the comparison only, he should decide if it will be beneficial for him to opt for flat interest rate or the reducing balance interest rates.
Other costs: Other than the interest, there are also other charges to keep in mind while taking a personal loan. There are processing fees, prepayment charges(in case of foreclosure of the loan) and late payment charges (in case of delay in paying the EMIs) which can be added along with the interest to be paid.
Compare Personal Loans
Comparing different banks’ features and interest rates of personal loan, it makes it easier for a person to make a decision to choose the best bank to take a personal loan from:
|Name of the Provider||Interest Rate||Processing Fee|
|Axis Bank Limited||15.50%-24%||1.50%-2.00% of the loan amount + Service Tax, as applicable|
|Bajaj Finserv||12.99% onwards||2.25%-3% of the loan amount|
|Citibank||11.49% to 15.99%||Upto 2.50% of the loan amount|
|Fullerton India||17.25%-37%||1.5% to 6.00%|
|HDFC Bank||15.75% to 20%||Upto 2.5% of the loan amount(Min. Rs. 1000 to max. Rs. 25000)|
|HSBC Bank||11.29% to 17.5%||Upto 2.5% of the disbursed loan.|
|ICICI Bank||11.59%-22.00%||Upto 2.25% of the loan amount + Service Tax, as applicable|
|IndusInd Bank||11.25% to 26%||Upto 2.5% of the loan amount|
|Kotak Bank||11.50-24%||Upto 3% of the loan amount|
|Punjab National Bank||12% to 15%||1.80% of the loan amount|
|State Bank of India||12.90%-14.90%||1% of the loan amount + applicable Service Tax|
|Standard Chartered Bank||11.99% onwards||Upto 2.25% of the loan amount|
|Tata Capital||11.99% to 19.50%||Starts at 999/-|