Personal loans are a great help in a situation where you are in immediate need of money and you want to get it without any undue hassles. Personal loans are usually unsecured loans. This means that there is no need for a collateral or security to get such a loan. However, because of this, interest rates charged will be higher. This is because the risk for the lenders is high. You can take a personal loan in the range of Rs. 10,000 to Rs. 20 lakhs depending on your repayment abilities and track record. Getting personal loans have become even easier with borrowers being able to apply for the loan online. Once all the criteria are met and the necessary the documents are furnished, you will be able to get the personal loan in less than six working days. In India, banks are the main lending agency for personal loans. In exchange for lending you the money, the bank collects the interest based on a predetermined rate known as the base rate which is fixed on an annual basis. Banks in India offer personal loans at fixed and variable rates of interest. With a fixed interest rate for a personal loan, the monthly repayment amount will be the same for the life of the loan. With a variable interest rate for a personal loan, the rate varies in relation to the base rate of the bank. This may cause the monthly repayment amount to go up or down.
Knowing more about personal loans in India While applying for a personal loan in India, it is necessary to do thorough research on which banks offer you the best deals in terms of interest rates, EMI schemes, etc. A bit of preparation will help you to get a personal loan with flexible terms and conditions and low interest rate. You should always take only the amount that you actually require and are comfortable repaying it in the specified time period without causing financial strain. Banks usually provide loans with repayment durations of 12months to 60months. Banks will charge a fee for processing your loan application. It can be around 1% to 3% of your loan amount and can vary from bank to bank. The interest rates on most personal loans vary from 14.5% to 22% depending on how good your ratings are on the various eligibility criteria. Most banks charge a prepayment penalty of 3% to 4% on your outstanding principal amount if you opt to prepay your personal loan. If you have defaulted on your payment, the banks may charge around 24% per annum on the outstanding amount from the date of default.
Factors affecting Eligibility Criteria for getting Personal Loans
The factors that determine loan eligibility varies from bank to bank. These factors include:
• Your credit score
• Your repayment capabilities
• Your age • Your income
• Your job status – whether you are self-employed or a salaried professional
Repayment methods for personal loans
You have various options for repaying your personal loan. You can check out the bank you are dealing with to find out which options are open to you. Most people repay their personal loan in Equated Monthly Installments or EMI. EMI is a fixed amount paid to the bank every month to pay off the principal and interest amount. The EMI is calculated based on your loan amount, the interest rate and loan tenure. With the help of an EMI calculator, you can calculate the amount you have to pay. You can pay off the loan by issuing post-dated cheques to the bank. You will have to provide at least 36 post-dated cheques upfront drawn in favor of the bank. Most banks also give an option of debiting the required amount from your account every month to repay the loan. You will have to give a standing instruction to debit your bank account with the EMI amount.
Banks offering personal loans
The following banks in India offer personal loans:
• Axis Bank
• ICICI Bank
• State Bank of India
• South Indian Bank
While taking a personal loan, always compare with different banks, so that you can get an offer which will be ideal for you.
Author bio: Ajay is a freelance author who writes about personal loan in India for his clients.