Did you know the various benefits of personal loans? You can use them to finance your dream wedding, vacation, education, home refurbishments, purchase expensive items like laptops, and more!
But to use these loans, you first need to know about them. So, here are five things to learn about personal loans.
5 Things to Know About Personal Loans
#1 – No Security or Collateral is Needed
The best bank doesn’t demand collateral or security for a personal loan. The loan is disbursed based on the applicant’s creditworthiness.
So, to get a loan, try to improve your creditworthiness by:
- Improve your credit score and history with regular loan repayments and credit card bill payments in full on time.
- Reduce your debt-to-income ratio by increasing your income and lowering your existing financial liabilities (suppose by choosing a bank that offers low rates on balance transfers of existing credit cards and personal loans).
#2 – You Can Apply Online
Gone are the days when you had to visit the bank to be granted a loan. Now, you can easily apply for a personal loan online on your chosen bank’s website or mobile app.
This comes with the following benefits:
- The application process takes only a few minutes, as it happens digitally.
- There’s no need for any paperwork.
- Once you meet the eligibility criteria and verify your documents, the loan is instantly disbursed to your account. So you can start using it immediately!
#3 – Documentation is Easy
When you apply for a loan online, the documentation process becomes digital and hassle-free.
Just upload the soft copies of a few basic documents like
- Identity and address proof (like an Aadhar Card), Income proof (like salary slips), Three months’ bank statement, and Details of your debit card or Net Banking to set up an e-mandate
- An e-sign, or e-Stamp for quicker loan disbursal
#4 – Both Salaried and Self-Employed People Can Apply
Yes! A loan is for everyone to finance their needs and dream purchases. Hence, a good bank offers personal loans to salaried and self-employed individuals.
Only ensure you meet the eligibility criteria under your specific employment category:
- As a salaried applicant, your age must be 23-60 years.
- As a self-employed applicant, you must be 25-65 years old. (Even if you can’t produce salary slips, you can show your bank statement or income tax returns as alternative income proof.)
- You must be running your business or working for at least three years.
#5 – You Can Enjoy Low Interest Rates
The best bank for personal loans offers them at competitive interest rates. Moreover, the payable interest goes down as the outstanding principal amount of the loan keeps reducing. This helps you repay the EMIs conveniently within the chosen tenure.
After meeting the eligibility criteria, use the personal loan EMI calculator on the bank’s website to know the monthly payments based on your chosen loan amount, interest rate, and repayment tenure. The best bank offers a flexible term of up to 60 months to ease your loan repayments!
