In this article, I am going to discuss on Personal Loan, Required Documents and Interest Rate for Personal Loan. Here I’ll explain you in brief about what is the personal loan, eligibility, interest rate of personal loan & who will provide the loan.
What is Personal Loan
Personal loan as the term itself explains, a loan taken from the bank purely for personal reasons. It could be for a wedding, vacation, to conduct some other functions, medical emergencies or any other person/domestic ned related reasons. This is the only unsecured loan which is provided to the public unlike home loan, car loan and auto loan. These days for many peoples it is difficult to raise a big amount suddenly either because they don’t have sufficient cash or because they’ve blocked their money in some investments or fixed asset. So, here it comes as a relief for all those who need immediate cash. Hence personal loan is a loan which loan taken purely for personal reasons.
The Personal loan is like instant cash which one gets from the bank after evaluating the income & financial background of a person. The individual who takes loan could be a salaried, businessman or any other person who is having a regular income source.
Apart from evaluating the income level then financial institutions and banks also consider other factors also like, the age of a person, he/she should be of minimum age of 21 years. Even if both the criteria are satisfactory there is one more very important aspect which they check i.e. the CIBIL score for the person. CIBIL score is nothing but it is checking the creditworthiness for last six months of a person where the information is collected from other banks with which the customer has dealt with. Once the information is collected then the CIBIL score (credit score) is calculated which generally ranges between 300-900, where 300 standing low and 900 being the highest. Anyone, who has the score above 750 will get the loan without any hassle.
These days the competitions are so much that there so many banks which provide the loan at a competitive interest rates. These loans are provided by public sector banks, private banks, financial institutions and non-banking financial institutions in India.
Document Required For Personal Loan
General documents asked by the banks or financial institutions while providing personal loan for Salaried person;
- Duly filled Loan application form
- 3 to 5 recent passport size photographs
- Age proof (like PAN Card, passport or 10thstd marks sheet)
- Address proof (Passport, Aadhar card, Driving License, Election Card or Electricity Bill)
- ID proof (PAN Card, Aadhar card, DL, election card, Passport etc.,)
- Salary slip or Pay Slip of the last three to four months (Latest)
- Bank statement of last 6 to 8 months (Salary account statement)
- Employment proof like a letter on official letter pad from the organization and the employee ID
General documents asked by the banks while providing loan for Self-Employed
- KYC Documents : identity proof, address proof, age proof
- Residence proof : rental agreement, gas bills, electricity bill not older than three months. If the passport has the permanent address, it can also be provided
- Personal bank account statement of last 6 to 8 months
- Company account bank statement of latest 6 to 8 months
- Office registration documents
- Proof showing that the business is in existence.
The list of documents provided above is only indicative and exhaustive. These documents differs from bank to bank and it is at the discretion of bank as to what documents they require from each person. When an old customer who is holding an account with a particular bank for more than 10+ years obviously the trust they have on him/her will be more and hence documents asked will be less and scrutiny will be also less. But the case with a new customer who is requesting a personal loan is different. In such cases, the scrutiny is higher and hence the documents that will be asked of such people will be more depending upon bank.
Interest Rate & Tenure
The interest rate of personal loan ranges between 11.25% to 37%. And generally, the tenure period is no longer than 5 to 6 years generally. Processing fee also may be charged by the banks but it differs from bank to bank. Interest Rates for Home Loan may be less compare to Personal Loan interest rates.
|Loan Tenure||Interest Rate|
|1 to 5 Years||11.25% to 37%|
If you have needed a personal loan and you want to check your payable EMI and total payable interest to the bank. You can calculate your EMI using out Personal Loan EMI Calculator. You can also check it through below given links by filling the loan amount, loan tenure & interest rate.
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