Personal Loan

Advertisements

What Is Personal Loan?

Money shortages are common among people. Sudden financial needs are unavoidable and require a huge sum of money. All financial institutions avail personal loans for those who need money immediately. Personal loan is nothing but borrowing some amount of money from any financial institution with some percent of interest based on the suitability of the applicant and it is not like property loan.

Personal Loan Eligibility

Personal loan requires correct documentation, age limit and regular income based business. In case of salaried persons, monthly income subtracting all the deductions, age and identity, residence and other proof documents are needed. For self-employed persons, proof of their stable business, age and identity, residence and other proof documents are needed. Age limit differs from bank to bank. Loan amount is determined based on the employment income profile and the employment status of the person. In case of self-employed persons, the business run period, from when the person has been running the business is taken for consideration and for salaried person, the employment period,from when the person was employed is considered. Minimum 1 or 2 years of employment or the business period are required. Maximum of 50 lakhs will be offered as loan. One should previously check themselves whether they are eligible for the loan amount they desired to have. All the lenders provide the eligibility criteria in their respective websites for availing personal loan. Also, many private websites provide various tools to assess the eligibility.

Documents Required

The documents required for applying personal loan are, filled application form, recent passport size photograph, identity proofs like passport, driving license, residence proofs like electricity bill, income proofs like salary bill of last 6 months and income tax receipts are needed. Now-a-days, Aadhaar number is also needed. Some banks demand only last three months salary slip.

Personal Loan EMI Calculator

Respective websites of the lenders are provided with EMI calculator. One can use that online tool to calculate the EMI. The calculation requires loan amount, interest rate, tenure and processing fee. If there is any part or pre-payment, it is also taken for calculation.

Disbursal of Loan

After submitting the loan application, the bank takes time for the process and to deliver the loan amount. This delivery of loan is called disbursal. Usually,personal loan takes a week for the disbursal. After the disbursal of loan, the amount will be given in the form of cheque or demand draft or the money will be deposited directly into the bank account.

Loan Limit

All type of loans has certain limit of credit. It usually depends on the profile of the applicant. If the applicant is a salaried person, loan limit looks up the take home salary of the person, calculating the net monthly income and deducting all matters like payment of any other loans. The minimum loan limit set by some lenders is Rs. 30000. It differs between the financial institutions.

Repay Methods

There exist different types of repay methods. Let's see in detail.

Part Payment

When a loan holder intended to repay the loan partially or fully before the end of tenure of the loan, it is termed as part payment. This amount is the sum less than the total principal of loan. Usually it is about 2% to 5% of the remaining loan amount.

Pre-payment

Pre-payment is the payment of EMI before its due in sum to reduce the number of outstanding EMI. It is allowed only after some number of repayments of EMI. Some bankers don't allow such repayment. It varies from bank to bank. Charges are applied for pre-payment.

Pre-closure

Pre-closure is defined as closing of loan by paying the full amount before the end of the term. There will be charges for the pre-closure. It varies between 2% to 5%.

Factors Affecting Personal Loan

Personal loan amount and its repayment can be affected by numerous factors. Interest rate and the loan amount are highly affected by some loan determinant factors.

Income Rate:

Loan amount is determined based on the net income of the person. Personal income is a belief of security to the bankers. Higher the income rate, higher the loan amount. There is a minimum income level set by the lenders. As it is a rough calculation on the income, a person without any other type of extra loans and deductions will get high loan amount.

Credit Score:

Credit score or the CIBIL score is a crucial factor in determining the loan. CIBIL is the short form of Credit Information Bureau India Limited. It is an individual score which yield lesser interest rate. It is used to value the individual worth for the calculation of loan limit and other things. A person with good credit score is more prone for proper repayment of loan. If the credit score is above 800, there may be the possibility to lower 0.25% of interest rate.

Individual Employment Place:

The applicant's employer and the place of his employment also determine the loan. Some companies have high reputation. Persons applying from those companies will be offered low interest rate. This is also considered as a factor because it provides employment stability. Persons having employment in low reputed firms will have high rate of interest compared to the high reputed company applicants.

Individual Relationship with the Bank:

The individual those who have better friendship with the bank will have low interest rate compared with others. The banks will always maintain better relationship with the worthy and loyal customers. It is because there are many lenders in the market with varying rates. So, the relationship will make the bankers not to lose the customers.

HDFC Bank Personal Loan

HDFC is one of the leading banks of India. Also, it has high reputation among people. Personal loans are available for self-employed individuals and salaried persons. Interest rate varies between 10.99% - 19.90%. The tenure is between 1 - 5 years. There exists processing fee of 2.5% for the loan amount and pre-closure charges of 4%, 3%, 2% for 2nd year, 3rd year and 4th year respectively. Pre-closure is allowed only after the completion of one year. Age limit for salaried person is between 21 - 60 years. Minimum and the maximum loan limit is from Rs. 50000 to Rs. 90 lakhs. The individual should earn a minimum average income of Rs. 15000. Employment stability and credit score are well-assessed. Existing loans, payment of EMIs, any other deductions in the individual’s income are also considered for loan calculation. And for a self-employed individual, it is 21 - 65 years and loan amount is between Rs. 50000 and Rs. 50 lakhs. The individual should have minimum 3 years of continuity of business. Also,the person should have last two years income tax return statements of the business. The capacity to repay the loan is well-assessed by checking the business stability, other loan status and FOIR. FOIR is the short form of Fixed Obligations to Income Ratio.

SBI Personal Loan

State bank offers four types of personal loan. They are SBI express credit personal loan, SBI Saral loan, SBI loans to pensioners and SBI Festival loan. And the loans are eligible both for the salaried and self-employed individuals. The interest rate is from 12.90% to 14.90%. There exists processing fee of about 0.5% of the total loan amount and pre-closure charge of 3% on the amount that is to be prepaid. Tenure of loan is up to 5 years. There is no requirement for guarantor. For the salaried persons, loan amount will be 12 times the net monthly income of the applicant. Minimum and maximum loan amount for salaried persons are Rs. 25000 to Rs. 15 lakhs. Interest rate starts from 11.90%. For the self-employed individual, interest rate starts from 12.40% and loan limit is between Rs. 25000 and Rs. 15 lakhs. Let's see the other types of SBI personal loan in detail. For the SBI express credit personal loan, the age limit should be between 21- 58 years and the loan limit will be Rs. 24000 to Rs. 15 lakhs. SBI pensioners personal loan limits the age by 60 to 76 years and the loan limit is from Rs. 24000 to 14 lakhs or up to the maximum of 10 times the pension amount. SBI Festival loans have the age limit between 21 - 50 years and the loan limit is Rs. 5000 to Rs. 50000. And the SBI Saral loan age limit is 21 - 58 years and the loan amount for applicant residing at metro cities starts from Rs. 24000 to Rs. 10 lakh. For others, it starts from Rs. 10000 to Rs. 10 lakhs.

AXIS Bank Personal Loan

Personal loan in AXIS bank is accessible for the salaried and self-employed individuals. Age limit, minimum annual income of both people, period of business or employment are considered for the loan. Loan amount starts from Rs. 50000 to Rs. 15 lakhs. Loan tenure is up to 5 years. Interest rate is determined based on the MCLR (Marginal Cost of Lending Rate). This MCLR is revised regularly. For the existing customers, loan interest is determined based on the BPLR (Benchmark Prime Lending Rate). It will be 15.75% per annum. For the salaried persons, the age limit is 21 - 58 years and should possess minimum 1-year work experience. The average net monthly income should be Rs. 15000. For the self-employed individuals, the age limit is 24 - 65 years and the business should be running for minimum of 3 years. The average net annual income should be Rs. 2 lakhs. The CIBIL score is much considered for the calculation.

ICICI Bank Personal Loan

ICICI bank personal loans are eligible for the salaried and self-employed individuals. The interest rate is based on MCLR for the new customers and on BPLR for the existing customers. It is roughly around 10.99% - 19.99%. There exists processing fee of 2.25% of the loan amount along with Rs. 1499 and the pre-closure charge of 5% of the remaining principal. It is allowed after the period of 6 months. There is no guarantor required. The age limit for the salaried person is 23 - 58 years and minimum monthly income of persons who are in Delhi, Mumbai should be Rs. 25000 and for others, it is Rs. 10000. And the persons living at Hyderabad, Pune, Kolkata, Bangalore, and Chennai should have the minimum income as Rs. 20000. There should be a minimum work experience for 2 years and 1-year experience with the present employer. For the self-employed individual, age limit is 28 - 65 years. If the applicant is a Doctor, the age limit is 25 - 65 years. In case of professionals, the minimum turnover should be Rs. 10 lakhs and Rs. 40 lakhs in case of non-professionals. The profit of the business should be Rs. 2 lakhs for professionals and Rs. 1 lakh for non-professionals. The applicant should be in business for a minimum period of 5 years and for doctors, minimum work experience should be 3 years. All the applicants should have a relationship for a period of 1year before applying for loan in the form of account holding or borrowing.