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( Last edited on : 08 May 2011 )
What is a Personal loan? Personal Loan is an unsecured loan for personal use which doesn’t require any security or collateral and can be availed for any purpose, be it a wedding expenditure, a holiday or purchasing consumer durables, the personal loan is very handy & caters to all your needs. The amount of loan can be ranged from Rs. 50,000 – Rs. 20 lakh & the tenure for repaying the loan varies from 1 to 5 years. More Information about personal loan section click articles about personal loan and Personal loan must read.
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Instant Personal Loan Quote From All Banks
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Benefits of Personal loan 1. A Loan without security : A Personal Loan is not a secured loan (bank doesn’t ask for any security or collateral) as against a Secured Loan where one is required to pledge a house or other security to acquire a loan. 2. Simple Documentation: A Personal Loan can be accessed with minimal paperwork or documentation & doesn’t take much time to procure as against a Secured Loan.
Basis to Compare Personal Loans • Compare Interest Rates : Personal Loan can be compared primarily on the basis of interest rates which vary across banks depending on your profile which is further linked to your occupation. Checking the eligibility parameters will help you find the best loan deal. • Other Charges : You should also check on the other charges like processing fee. • EMIs : EMI is the monthly equated installment which constitutes the principal amount and the interest on the principal equally divided across each month in the loan tenure. salary/income. employment or business & other factors of the borrower. 4. 20 lakh. • Evaluation of various Loan offers : You should first calculate the entire loan cost across banks which constitutes the rate of interest & banks other charges. Check out your eligibility by various banks. • Turnaround time : It becomes one of the most important factors in evaluation of your loan application when you are in a dire need of money. Following are the lists of charges: . it ranges from 1 year to 5 years. you can take a loan ranging from Rs. Charges involved in Personal Loan The Rate of interest alone should not be judged before you finalize your application. apart from the rate of interest. Evaluate offers keeping the tenure of the loan constant & compare the rate of interest. Use our EMI Calculator to compare EMIs across banks • Tenure : Tenure is the time frame for the personal loan payments to be paid back to the bank. The personal loan interest rate ranges from 12% to 25%. EMIs & other charges. credit history etc. This process will help you get the Best Loan deal. • Eligibility Check : Before taking a personal loan you must know the eligibility criteria’s offered by various banks on the basis of which they offer loans and also compare personal loan banks. on the other hand shorter loan tenure will carry higher EMIs & the interest amount is less. you must go for that loan which is offering you at the minimum rate. You must compare the loan offers by keeping the tenure constant. Banks are concerned about the fact that whether the borrower is able to pay back the loan with interest before the due date or not and they confirm this by checking the income. Personal Loan also constitutes other charges levied by the lender which affect the overall cost of your loan & should be considered while comparing it across banks.3. If you have a longer tenure you will end up paying more interest & will have lower EMI. you must check this parameter which varies from bank to bank. Turnaround time is the time which banks take in processing your loan application. pre-payment penalties and documentation fee because they increase the overall loan cost and vary widely across banks. Big Loan amount : Personal Loan is a means to fulfill bigger loan requirement. 50. No specification about the end use of the loan amount : You are not required to disclose the end use of the money borrowed.000 to Rs.
• Processing fee : It is a fee charged by banks from the borrowers to process their loan application. How does the Cibil Score affect your loan application? This a norm wherein the banks before giving Personal Loan checks the database of all loan borrowers in the country by the Credit Information Bureau of India (CIBIL) which is called the Cibil Score. The eligibility criterion of a Personal Loan is primarily based on the work profile of a loan seeker which is broadly divided into the following two classes: . employment. Deal4Loans has brought in the Eligibility Criteria Check for Personal Loan seekers. profit & loss account. continuity of business so as to make sure that they repay the loan with interest before the due date. These vary from Rs. your loan application would certainly be rejected. • Prepayment fee : Banks charge borrowers with a fee when they pay the loan EMIs before the tenure which normally is between 2-5% of the outstanding loan amount. existing relationship with the bank. 250-500 for every bounced cheque given for the payment of the loan amount owing to the insufficient funds in your account.Salaried In addition to the above factors banks also consider other aspects such as age. 500-Rs.Self-employed . work experience. Documents required in Personal Loan The documentation process in personal loan is very fast as against secured loans. partnership deed & other mandatory documents etc. To find your eligibility Criteria across various banks in accordance with the above parameters. banks charge a late payment fee with your EMIs. • You should note that the above charges vary across different banks. it is normally between 1-2 percentage of the loan amount. • Cheque bounce charges : Banks charge between Rs. 1000. Following documents are required by financial institutions to process the loan application: • Identity proof • 3 to 6 months Bank statements • Residence proof • Salary slip • Guarantors & their same set of documents In case of self-employed banks require balance sheets. On other hand if it is higher say 800. repayment capacity etc. If there has been a default in your loan payment. for instance if your credit score is 100 then your loan application might be out rightly rejected. Personal Loan Criteria by various banks Banks offer Personal Loan to borrowers depending on various factors such as income. • Late penalties : When there is a delay in paying your monthly EMIs of your loan. They normally range from 2-3% of the EMI. Your Cibil score ranges from 100 to 999. . • Documentation charges : These are the charges for verifying the borrower’s documents to processing the loan application. you should consider these charges before choosing the personal loan as they will determine its real costs. then your loan application would be processed faster & will be rewarded with lower interest rates & discounts in processing fee & other charges.
It is always advised to take a loan at reducing balance interest rates as the Flat rate calculation comes out to be really expensive. monthly. Reducing Balance Interest Rate 2. Top . The outstanding loan amount is never reduced over the loan tenure. this will invite the pre-payment charges levied by the bank which are upto 5% of the outstanding loan amount. There are basically two types of interest Rates offered by banks which are 1. Cibil Score Check : You must know that your credit history play a very important role in the acceptance of your loan application as CIBIL keeps a record of credit history by collecting your credit data from various financial institutions. A decent credit score not only gives a green signal to your loan application but also offers you lower interest rates by the bank. Important pointers in Personal Loan Increase your loan eligibility : You can increase your eligibility of the loan amount by clubbing your income with your spouse’s income.You can improve your credit score by repaying your loan EMIs on time and always pay the minimum payment on your credit card to avert from the bad credit score. quarterly or annually. the interest on your loan keeps on reducing as it is calculated on the reduced principle amount which gets reduced daily. which is better? The Personal loans Interest Rates vary between 14% and 25% depending on your profile & payment ability. Relationships with banks : You can get discounts on interest rates if you take a loan from a bank that you already deal with for your existing relationship. Penalties : If you think of closing your loan earlier. Flat Interest Rate In the Reducing Interest Rate calculation method. Reducing Interest Rate or Flat Interest Rate. Flat Interest Rate calculation method on other hand implies that your rate of interest remains the same & is calculated over the entire loan period. in this case banks will consider your past records of credit repayments and your saving account balance and you will be offered discounts on the basis of your current relationship. Some banks have this norm wherein you are not allowed to close your loan within the first six months of your loan term. You should also know about the charges taken by the bank for paying your EMI late.
75%-22% 16%-22% Apply .5%-22% 19%-28% 16%-21% 16.Personal Loan Rate of Interest ( Last edited on : 08 May 2011 ) Bank Citibank HDFC Bank Fullerton India Citifinancial SBI Standard Chartered Interest Rates 15%-18% 15.
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