Freedom of Choice – something that was once considered a privilege bestowed only on a select few earlier, is now a reality for all irrespective of their background. Unlike in old times, when choices were limited, we should certainly consider ourselves lucky in the present times.
This can be further witnessed in the advancement of easy access to financial products that help fulfil our dreams – one such being availing a Personal Loan. Let’s learn what it is, how it can be used, and what you should consider before choosing a lender.
What is a Personal Loan?
A Personal Loan is a type of unsecured loan, which means you don’t need to put up any assets as collateral. It is an excellent financial choice for those who wish to fulfil their goals or ambitions using that capital. It can also be used for necessary financial assistance during emergencies or unforeseen circumstances.
A Personal Loan can be used for:
- Funding Higher Education - With a Personal Loan, you won’t have to compromise on getting the best in education for yourself or your family.
- Financial Assistance During Medical Emergencies - It is important to stay prepared and know where to find the right financial assistance during a medical emergency. You can avail of a Personal Loan instantly and pay off your medical expenses.
- Paying for Travel or a Vacation Abroad - Now you can explore your favourite destinations without worrying about the cost of travel. A Personal Loan can fulfil all your travel and vacation goals while you get to focus on the fun part.
- Arranging your Dream Wedding - With a Personal Loan, you can arrange your dream wedding and cover its expenses in a stress-free manner.
- Renovating/Repairing your Home - Home renovations or repairs are required to keep your house in a good condition. A Personal Loan can help you fund your home renovation requirements without burning a hole in your pocket.
To get a Personal Loan, you need to make sure you find the right lender. This ensures that you get the offer that best suits your needs. Let’s find out how.
The Top 7 Factors to Consider Before Choosing a Personal Loan Lender in India
Here are the major factors you should know about before choosing the right Personal Loan Lender:
- Loan Processing Time - First, find out how quick is the loan processing from application to disbursal. A swift disbursal process ensures that you receive the required funds on time to fulfil your specific purpose.
- Loan Amount - Next, find out how much you can avail of from a Personal Loan. You can get up to ₹30 Lakh, depending on the lender and the end purpose for which you require funds.
- Tenure - The repayment tenure for a Personal Loan is important as it determines your EMIs. Some NBFCs offer flexible repayment tenure that ranges from 12 to 60 months. This will give you enough time to repay your loan within the specified period.
- Interest Rate - You should choose a lender that offers Personal Loans at affordable interest rates. With a low-interest Personal Loan, you can also reduce your EMIs and plan your budget appropriately.
- Fees & Charges - Choose a lender that charges only nominal loan processing fees over those that charge higher fees. Also keep an eye on the foreclosure and part payment charges lenders might be taking. It is best to take loan from a lender who don’t charges anything for the same. The standard fees & charges for a Personal Loan offered by some NBFCs is up to 2% of sanction amount plus applicable taxes.
- Personal Loan Eligibility Criteria - Check the eligibility criteria of the lender before applying for the loan. Easy eligibility criteria of the lender will help to get the loan processing done quickly. The Personal Loan eligibility criteria usually include:
- Applicant’s age
- Applicant's citizenship.
- Applicant's job status.
- Applicant's job experience and stability.
- Applicant's monthly net take-home salary and obligations.
- Documentation/Paperwork - Check the list of documents required by lenders to verify the borrower’s details before approving a loan. Any lender who is asking for many documents will delay the process of loan approval. The basic documents needed from borrowers include:
- KYC documents like Aadhaar/PAN Card.
- Current address proof (Passport/Utility bills/Rent Agreement).
- Latest salary slips and salary credit bank statement from the last 3 months.
- Proof of employment, such as official mail ID confirmation /Emp ID Card.
Now that you are aware of what to look for before choosing a Personal Loan Lender in India, choose wisely. Go ahead and kickstart your journey towards fulfilling your dreams.