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If you want to renovate your house, or plan a big wedding, go on a vacation or just want to pay some old debts, then personal loan is meant for you. Just get in touch with Registrationwala and realize your needs.

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Personal Loan

Personal Loan in India

There are times that you would need a short term loan to take care of sudden expenses. When that happens, there are many choices of loan that you can choose from. The best choice would be to go for personal loan. Why?

It is because personal loan is a short term loan that required no collateral i.e. any security from your end.

The “no security” nature of such loans makes this type of finance as the most lucrative one.   To that end, if you come across any sudden or planner expenses such as vacations, medical expenses, restructuring debts, etc. this type of finance is the best one to go for.

However, you have to take into account the short-term nature of this loan. Whereas mortgage loans give you about 15 to 30 years of payback time, the personal loan only gives you 1 to 5 years.

Benefits of personal Loan

This type of finance comes with an added benefit that you can use it for virtually any purpose (if the purpose is legal that is). Some of the reasons for opting for this type of finance are as follows:

  1. If you want to renovate your house.  
  2. If there is a sudden wedding expense or any other extravagant party.
  3. If you want to buy a new and expensive electronic gadget, say like an iPhones.
  4. If you want to go on a vacation with your loved ones.
  5. If you have to balance your previous debts.
  6.  If you want to finance some marketing endeavours.

Furthermore, personal loans are preferred because:

  1. They are easy to get access to
  2. The documents required are minimal.

These factors have contributed to make this loan the most popular one in India. Therefore, most popular banks and NBFC in India avail this type of loan to the masses.  

Eligibility Criteria for Personal Loan

If you are an Indian national who is salaried or self employed or a professional in any other sector, you are eligible for a personal loan. However, because there is no collateral, the lenders would put you under extra scrutiny and you would have to pass the following factors to even be considered personal loans:

  1. Your ability to repay: You should have been working for your current company or running your own business for a certain number of years.
  2. Income: The amount you are earning should be within the regulations of the lender.
  3. Age: the minimum age to be lent the loan is 21 an the maximum age is 65
  4. Credit rating:  You should have a good credit score and a good credit history.
  5. Existing instalments: You shouldn’t have any prior liabilities left. If there are an, your income should be high enough to cover all of them.

Required Documents for Personal Loan in India

When it comes to documents required to initiate the entire process, most of the banks and he Non-Banking –Financial-Institutes have the same needs.

If you are a self-employed person:

  1. A duly filled and signed application form.
  2. An identity Proof that can include anything from the following:
    1. Passport
    2. Aadhar card
    3. Voter ID
    4. Driver’s license
  3. PAN card of the applicant.
  4. Proof of age that can now include the Aadhar card or the 10th class CBSE certificate.
  5. Bank statement of the last 6 months.
  6. Proof of address:
    1. Telephone bill
    2. Electricity bill
    3. Or any other utilities bill
  7. Proof of continuation of the enterprise.
  8. Latest ITR that will include the computation of income, recent balance sheet and profit and loss a/c for the last two months before applying for loan.
  9. Furthermore, you will also be required to present any of the following:
    1. Sole proprietorship declaration
    2. Partnership Deed
    3. Original copies of MOA and AOA

If you are a salaried individual

  1. A duly filled and signed application form.
  2. Proof of identification that can include the following:
    1. Aadhar card
    2. Driver’s license
    3. Voter ID card
  3. PAN Card of the applicant
  4. Your address proof:
    1. Electricity Bill
    2. Water Bill
    3. Phone Bill
  5. Bank statement of the last 6 months.
  6. Recent salary slip
  7. Latest version of Form 16

FAQs

You can use personal loan for practically anything. The expense that you spend this loan ranges from big renovations, celebrations, vacations to things like debt consolidation. When it comes to things that you can spend this loan on, you would realize that it is very versatile.

In order to be eligible for personal loan, you should first be from India, and then you should be a salaried or a self employed individual. Now, once you have gotten this basis covered. Your income should be enough to maintain the loan repayment, your age should be within the regulation, your credit score should be good and you shouldn’t have any prior EMI left (if there are, your earnings should be high enough to cover them)

The tenure in which you have to pay back the personal loan is from 1 to 5 years. However, depending upon he financial institutes, you can get either a decrease or an increase in the tenure period.

In order to get the lowest rates for the personal loan, you have to inquire with multiple financial institutions and among them, get the finance that suits you best. However, there are certain portals out there where you can actually check the databases to see which financial institutes or banks are providing the lowest interest rates.

Depending upon the bank or the initial conditions of the loan, you can either get fixed or floating rates for loans. If the rate is fixed, the interest would be constant throughout the repayment tenure, otherwise if it is floating, the loan rates might vary during the repayment tenure.

Usually, there is no tax benefit associated with personal loan. However, there are some cases in which if you are taking personal loans for reasons that involve home renovation, you would be granted tax benefit according to section 24. That being said, the deduction would only be on the basis of interest, not the principle amount.

There are three major credit agencies in India that have association with most financial institutions/banks in the country, and they score the individuals on the basis of their repayment track records on the basis of previous loans.

Yes, you can apply for the ECS for repayment of the personal loan. However, if you want there are other ways to repay via cheques or cash depending on your banking institute.

While you are applying for the personal loan, you would also have to pay the processing fee which is about 1 to 2 percent of the principle amount.

Once the loan has been approved, you will get the amount wither through the check or the electronic transfer.

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