What is Personal Loan? Apply for loans, know interest rates and eligibility conditions

A personal loan is unsecured, meaning the borrower does not need to submit any guarantee/security or pledge anything. Anybody can apply for these Loans. The repayment tenure of this loan is usually between 1 to 5 years. Unlike a home or car loan, this loan can be used to meet any requirement like medical emergencies, education expenses, travel and marriage etc.

Features and Benefits of Personal Loans.

  • These loans will be available without pledging anything
  • You can get a loan up to Rs.40 lakhs
  • It can be used for any work
  • Pay period will be up to 5 years, may extend
  • minimum paperwork
  • Instant transfer of loan amount

Factors Affecting Personal Loan Interest Rates

Given below are the factors on the basis of which the bank decides the personal loan interest rates:

Your credit score

The credit score reflects the riskiness involved in giving a personal loan to an individual. So if you have a low credit score, the bank will offer a loan at a higher interest rate as a countermeasure to taking more risk. Hence, it is always advisable to maintain a credit score of 750 or above.

Your monthly income

Banks / loan institutions believe that the applicant whose income is high will be able to repay the loan on time. Hence, people who have high incomes can get personal loans quickly and at low-interest rates.

Where do you work

While deciding the personal loan interest rates, it is also seen where you work and what work you do. Individuals working in reputed institutions get loans relatively quickly and at better interest rates. People doing government jobs also get better interest rates on personal loans because of their job security.

your relationship with the bank

If you have a good and old relationship with any bank and you have already paid the loan on time, then the bank can give you loans on easy terms and with low-interest rates as compared to others. Existing customers of the bank can also get pre-approved loan offers.

Personal Loan Types

Marriage loans

The cost of weddings in India is often very high and it is not wise to spend all your savings on a wedding. Also, it is not possible for everyone to bear the entire cost of the wedding. Hence, you can take a marriage loan for marriage, which is a variant of a personal loan.

Higher Education Loans

You can take this personal loan for yourself, your children or your spouse to study abroad. You can use this loan to pay for college fees, flight tickets, visas, living expenses and more.

Medical loans

If there is a sudden medical emergency and you or your family does not have medical insurance, you can take a personal loan for medical expenses.

Home Renovation Loans

People keep making changes in their homes for their convenience and need, whatever the cost may be. You can take a personal loan for home renovation and improve your home.

Travel loans

You can take a personal loan for vacations with your family or for traveling around the country and abroad.

Debt consolidation loans

If you are paying multiple small EMIs, you can pay off all those loans by taking a debt consolidation loan and then pay only one personal loan EMI.

Personal loans eligibility conditions

To avail a personal loan, you need to fulfill the following key conditions:

  1. Age: Applicant’s minimum age should be 18 years and maximum 60 years
  2. Credit score: 750 or higher
  3. Salary: The minimum salary of the salaried people is Rs 15000. should be per month
  4. Income: Minimum Rs.5 lakh for non-employed customers. Per year
  5. Stable employment: 2 years total work experience out of which 1 year should be in the same job
  6. Continuity of business: Non-employed professionals running business for at least 2 years
  7. Job Type: Individuals working in reputed Institutions, MNCs, Private and Public Limited Companies, Government Institutions, PSUs.