Bangalore: Planning a luxurious holiday but budget seems to be a constraint? Need to make a huge purchase and you are running out of funds. In such a scenario one opts for a personal loan. Personal loans are not restricted in terms of how the money is used.
Personal loan is an unsecured loan which can be used for any purpose that the borrower deems necessary. The amount of loan can be ranged from
50,000 - 20 lakh & the tenure for repaying the loan varies from 1 to 5 years.
Advantages of Personal loan
No security required: To avail a personal loan you are not required to produce any assets to bank as a security or collateral. This is different from a secured loan
Minimum Documentation: The time required to acquire a personal loan is less when compared to a secured loan. A Personal Loan can be accessed with minimal paperwork or documentation. The documents required would be:
a.Proof of Identity (Passport Copy/ Voters ID card/ Driving Licence)
b.Address Proof (Ration card Tel/Elect. Bill/ Rental agreement / Passport copy/Trade licence / Sales Tax certificate)
c.Bank Statements (latest 3 months bank statement / 6 months bank passbook)
d.Latest salary slip or current dated salary certificate with latest Form 16
No specification about the end use of the loan amount: You are not required to disclose the end use of the money borrowed, 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, employment or business & other factors of the borrower.
Loan amount not restricted: when you have to fulfill a bigger loan a personal is taken. You can take a loan ranging from50,000 to 20 lakh.
Tips to look out for before you decide to avail personal loan
1.A detailed market survey to get information on various options like the interest rates, the pre-payment charges, terms and conditions is very essential.
2.Interest rates are the most critical of all the costs that you pay. Hence it is advised to opt for the cheapest option. Beware of banking terms like flat personal loan interest rates that appear to be cheaper but are in fact the most expensive. It is always advisable to choose a monthly reducing balance option than a half-yearly reducing option or flat-rate option. This means lower effective cost for the same stated interest rate. Interest-free loans are sometimes too good to be true but view them with suspicion.
4.There will also be other costs such as processing charges. You should ask for zero processing fees.
5.Also ask for zero-penalty for pre-payment option. If this is not available, then lowest cost would be better. Make sure you work out as to how much these other costs add up to. So even though the interest rate may be lower, it usually adds up to being expensive.
6.Usually the EMIs may come out a lot more than what you can afford on a monthly basis. But keep in mind that you should know that lower tenure will reduce the loan amount and lower loan amount will reduce the tenure.
7.Don't forget to take a letter with the relevant details in a banks letter-head mentioning the likes of, exact rate of interests, processing fees, pre-payment charges along with interest-schedule. Do check the terms and condition before signing the paper.
8.Don not produce false information and do not sign on any blank document. ..
Personal loan is an unsecured loan which can be used for any purpose that the borrower deems necessary. The amount of loan can be ranged from
50,000 - 20 lakh & the tenure for repaying the loan varies from 1 to 5 years.Advantages of Personal loan
No security required: To avail a personal loan you are not required to produce any assets to bank as a security or collateral. This is different from a secured loan
Minimum Documentation: The time required to acquire a personal loan is less when compared to a secured loan. A Personal Loan can be accessed with minimal paperwork or documentation. The documents required would be:
a.Proof of Identity (Passport Copy/ Voters ID card/ Driving Licence)
b.Address Proof (Ration card Tel/Elect. Bill/ Rental agreement / Passport copy/Trade licence / Sales Tax certificate)
c.Bank Statements (latest 3 months bank statement / 6 months bank passbook)
d.Latest salary slip or current dated salary certificate with latest Form 16
No specification about the end use of the loan amount: You are not required to disclose the end use of the money borrowed, 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, employment or business & other factors of the borrower.
Loan amount not restricted: when you have to fulfill a bigger loan a personal is taken. You can take a loan ranging from
50,000 to 20 lakh.Tips to look out for before you decide to avail personal loan
1.A detailed market survey to get information on various options like the interest rates, the pre-payment charges, terms and conditions is very essential.
2.Interest rates are the most critical of all the costs that you pay. Hence it is advised to opt for the cheapest option. Beware of banking terms like flat personal loan interest rates that appear to be cheaper but are in fact the most expensive. It is always advisable to choose a monthly reducing balance option than a half-yearly reducing option or flat-rate option. This means lower effective cost for the same stated interest rate. Interest-free loans are sometimes too good to be true but view them with suspicion.
4.There will also be other costs such as processing charges. You should ask for zero processing fees.
5.Also ask for zero-penalty for pre-payment option. If this is not available, then lowest cost would be better. Make sure you work out as to how much these other costs add up to. So even though the interest rate may be lower, it usually adds up to being expensive.
6.Usually the EMIs may come out a lot more than what you can afford on a monthly basis. But keep in mind that you should know that lower tenure will reduce the loan amount and lower loan amount will reduce the tenure.
7.Don't forget to take a letter with the relevant details in a banks letter-head mentioning the likes of, exact rate of interests, processing fees, pre-payment charges along with interest-schedule. Do check the terms and condition before signing the paper.
8.Don not produce false information and do not sign on any blank document. ..
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