Personal Loans are a popular for financing life’s essential purchases. They offer a convenient way for arranging money for various needs, like funding your next trip or modifying your home. Though they are an obligation and commitment, applicants must remember to research and analyse the available options thoroughly.
Before you begin, evaluate your creditworthiness, income, and repayment capacity to get reasonable Personal Loan interest rates. Ask these questions to ensure you are ready for the borrowing:
What is the eligible amount?
The minimum and maximum borrowing limits set by banks differ. Your request gets sanctioned after meeting the Personal Loan eligibility requirements. The amount ranges from Rs. 10,000 to Rs. 30 lakh, depending on the bank and your repayment ability. Applying for a repayable amount and ensuring a low debt-to-income ratio is a thumb rule.
What is the duration?
Following disbursal, you need to start paying the equated monthly instalments within 30 days. The interest rates for Personal Loans and instalments are impacted by the tenure chosen. Since these are short-term, the tenure ranges between 12 to 60 months and varies with the bank and credit history.
What factors determine the interest?
The Personal Loan rates are dependent on a wide range of factors, including your CIBIL score, amount, and tenure. Generally, a CIBIL score of 750-plus is excellent as it helps you secure the lowest possible rate from the bank on the Banking app.
What are the fees?
You pay at least 2% to 3% of the Personal Loan for self-employed as processing fees. Also, there is a prepayment penalty charge if you pay it in advance. Therefore, it is safer to pay during the tenure and plan finances well.
Are there any document requirements?
Remember that the documentation, eligibility, and amount for a Personal Loan for salaried differ according to your employment status. Usually, banks verify your identity, residential details, income proof, and the purpose of borrowing. They evaluate your borrowing behaviour by analysing your credit history.
Why is CIBIL score important?
Knowing the CIBIL score is the first step for any applicant. If it is above 750, you can negotiate the interest rate on a Personal Loan with the bank. Having a good credit history and clean repayment record speeds up the entire process and proves discipline.
Also, use the EMI calculator for a Personal Loan to assess your instalment amount over the repayment tenure by entering the amount, interest rate, and term. The tool represents the breakup in a pie chart with instant results.