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How to Choose the Right Personal Loan for Yourself?

How to Choose the Right Personal Loan for Yourself?

Personal loans are unsecured loans, which are easily available based on your income. By getting a personal loan for yourself and your family, you can meet urgent cash requirements for a family holiday or child’s education, etc. and could be paid easily in small monthly installments.

Eligibility for Personal Loans

Your eligibility for personal loans depends on various criteria like age, sex, occupation, income, place of residence and credit score. The company you are employed with may also impact the amount of personal loan you can leverage from a bank. Bank also checks your history on current or previous loans. Banks do not allow you to get a loan with a monthly installment which exceeds more than fifty percent of your take home salary.

Banks need applicants to have a continuous source of income, either salaried or self-employed. You must submit all the important proofs of your income depending on the source of employment.

Loan Duration

Personal Loans can be easily paid for the repayment duration of one year to five years. Five years is the maximum duration in which personal loan need to be paid. It maybe that with a longer duration for loan repayment your monthly EMI may reduce however you end up paying the much higher amount of loan taken.

Documents Required

Although the documents required for getting a personal loan may vary from one financial institution to another, some of the common documents need to be submitted as income proof. They may comprise of salary slips for salaried employees and Income Tax Return form for a self-employed person; then you may have to submit the address proof, a government issued identity proof, etc.

Repayment of the Loan

The personal loan may be applied with floating or fixed rate of interest. Floating rate of interest depends on various market factors and may vary each month however under fixed rate of interest; you may have to pay based on a fixed rate of interest. It is recommended to go for fixed rate of interest so that you don’t find surprises every month and your first and last monthly installment amount is the same.

The personal loan could be paid in easy monthly installments. Some bank does allow premature loan payment but there is a charge levied by the banks for premature loan payment, and you may not go to all the future interest you need to pay otherwise.

The repayments could be made online if you have your account linked with that bank. Or you could pay through post dated cheques in favor of the bank.

There are various myths about getting a loan; however, you could avail many benefits through this financial instrument. Personal loans can help you meet your urgent cash needs, and it comes with easy repayment option. Another benefit of this loan is that you could get a decent amount as a loan based on your credit score without putting anything as security.

Banks only check your repayment strength and give the loan based on it. You may also avail tax benefits sometimes on this loan amount, as per the Government norms.

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