The number of people applying for personal loans has increased in recent years. People who need funds for any personal requirements are taking the assistance of personal loan nowadays. If you are an Indian and planning to take a personal loan in the near future, then you should be aware of some important things about taking a personal loan in India:
How Personal Loan Works:
A personal loan is an instalment loan which you can take to fulfil any personal and legal requirement from the government or private banks of India. You can decide your loan amount and the loan repayment tenure on the basis of which banks fix your interest rates and calculate the loan EMIs. These loans are easily approachable and approved faster than any other loan.
Types of Personal Loans:
You can choose from two types of personal loans that are:
Unsecured Personal Loan: This loan doesn’t require anything as collateral security; which means that you can avail the loan without mortgaging any precious belonging in return. Getting approval for this loan is a little bit difficult as the banks check your credit score and your credibility before approving the loan.
Secured Personal Loan: This loan is backed up by collateral security; which means that you have to mortgage something worthy for getting the loan amount. The bank has every right over your asset that you have mortgaged in case you fail to pay the EMIs of the loan. The approval process in this loan is faster and easier as compared to unsecured loans.
Eligibility Criteria of Personal Loan:
The criteria differ from bank to bank but, the general eligibility criteria is related to your income, occupation, age, place of residence, and the capacity to repay the loan.
A person should meet the set limits of all these things to avail a personal loan. Apart from it, you should have a regular source of income or stable job for getting the loan. Your credit score and place of working is also considered.
Personal Loan Duration:
There is flexibility in loan tenure as you can select it as per your own comfort still; you have to stick to a maximum and minimum limit. It also varies from bank to bank, but the general limit is minimum 1 year and maximum 5 years. Anything in between will be easily acceptable by the bank, but the banks rarely agree on both the extremes.
Personal Loan Amount Limit:
The loans are available from a range of 30 thousands to 40 lakhs, but the amount that you are allowed to take totally depends upon your income and credit score. Banks calculate your limit in such a way so that your EMI shouldn’t be more than 40-50% of your monthly earnings.
If you have any existing loan, then it will also be considered before deciding your loan amount limit as you have to pay off the remaining EMIs of that one also. The profit of self-employed individuals is considered to decide the limit.