Things to Know Before Availing a Personal Loan
Personal loans are the easiest and most affordable option when it comes to availing external financing. These are unsecured or collateral-free in nature, so you don’t have to mortgage an asset to access the funds.
You also don’t have to go through many difficulties when applying for personal loans. Thanks to NBFCs, you can avail a personal loan even within 24 hours.
However, you have to know the following things to enjoy the benefits of a personal loan. These include:
1.Credit Score
A minimum credit score of 750 is mandatory when applying for unsecured loans. Lenders prefer customers with a high CIBIL score as it vouches for their creditworthiness. A high credit score can also enable you to get a lower rate of interest.
2. Documents
NBFCs offer personal loans both to salaried and self-employed customers. The applicants have to provide the following documents:
- KYC documents like Aadhaar, PAN, Passport, Driving License, Voter ID, etc.
- Bank account statements of the previous 3 months.
Salaried customers have to produce their employee ID card along with salary slips of the previous 2 months. Self-employed applicants have to provide income tax returns of the last year and previous year’s turnover audited by a CA.
3. Eligibility Criteria
You have to be within the age of 23 and 55 years to avail a personal loan. While salaried customers have to be employed with an MNC or public/private entity, self-employed ones need to own a business that is at least 3 years old.
4. Rate of Interest
Personal loans are available from numerous financial institutions including NBFCs. Hence, it is better to compare the rates on offer before you apply.
Along with interest rates, also check the charges like processing fees, foreclosures charges, part-prepayment charges, etc.
5. Tenor and EMI
Determining the tenor and calculating your EMIs is crucial before you apply. You can easily do so by using a personal loan EMI calculator.
Note that shorter tenors increase the EMIs but reduce the total cost of the loan and vice versa.
Make sure to know all of the points mentioned above before you avail a personal loan. Compare all the features and benefits before you choose the right lender.
