9 Must-Read FAQs about Personal Loans
Whether you are planning to renovate your home, have a grand destination wedding, pay your Credit Card debt or bear any emergency medical bills, a Personal Loan can be the best solution to all your financial woes.
1. What is a Personal Loan?
It is an unsecured financing option which doesn’t require collateral like a home, car and so forth. You can apply for one at a bank, NBFC (Non-Banking Financial Company) or online lending platform like www.mymoneymantra.com.
Like other instalment based loans, a Personal Loan is also repaid in EMIs (Equated Monthly Instalments) with a fixed rate of interest. If you have a good credit score, you can Get a Personal Loan at the Low-interest Rate.
2. What can a Personal Loan be used for?
You can use Personal Loans for home improvement, medical expenses, auto expenses, wedding expenses, buying gadgets or electronics, paying your credit card bill, debt consolidation or any other unexpected large expense.
The best use of a Personal Loan is paying off a high-interest credit card bill. Personal Loans usually have a lower rate of interest as compared to the outstanding on credit card dues. Therefore using a Personal Loan to pay your credit card outstanding is a savvy financial move. You can choose a fixed monthly payment plan and by doing so and save on paying high interest rates.
3. What are the eligibility criteria to avail a Personal Loan?
Since a Personal Loan doesn’t involve any collateral; it is easy and quick to qualify for it. You just need to meet the following criteria:
• Credit score: 650 or above is usually acceptable
• Good repayment record: without any default or delay in payment of your existing debt obligations
• Age: Minimum 21 years and maximum 60 years
• Continuity in profession
• Income as required by the lender
4. What is a Pre-Approved Personal Loan?
Have you ever received an email or SMS regarding a Pre-Approved Personal Loan Offer?
Many lenders conduct a soft credit inquiry to promote their pre-qualified loan offers.
If you qualify, the Bank will approach you guarantying a loan. This guaranteed loan is known as a Pre-Approved Personal Loan.
5. What is the documentation required for a Personal Loan?
Lenders ask for certain documentation to verify your identity and earnings. Here are some documents you will need to provide at the time of application:
• Aadhar Card
• Voter ID
• PAN Card
• Driving License
• Aadhar Card
• Driving License
• Registered Rent Agreement
For Salaried Employees
• Salary slips of last 6 months
• Form 16 and ITR for last 2 years
• Last 3 months’ Bank account statement showing salary credited
• Employment Certificate/Employment Letter
For Business Owners/ Self-employed Professionals
• Balance Sheet
• Profit & Loss Statement
• Income Tax Return
• Loan application
• 2 recent passport size photographs
6. How much money can I borrow and what will be the repayment duration?
The amount of money that can be borrowed depends on the applicant’s financial situation (income/cash inflow, other loan obligations, and so forth.). Depending on your financial standing, you may apply for a Personal Loan between Rs. 50,000 – 50 Lakhs with repayment tenure of 12-60 months.
7. Can I repay my loan prior to the maturity date?
If at any time during the loan tenure you choose to pre-pay your loan, make sure you are aware of the pre-payment charges. Pre-payment may make your loan foreclosure/ partial closure more expensive than you thought. Hence, opt for this facility only if it is beneficial to you.
8. Why is the interest rate on Personal Loans higher than on Mortgage Loans?
A secured loan is backed by an asset or collateral (home, car, and so forth.). If borrowers default on their payment, they can lose their asset. However, being unsecured in nature, a Personal Loan doesn’t require you to pledge collateral. The lender takes a risk regarding repayment of the loan. Hence, a Personal Loan involves higher interest rates as compared to mortgage/secured loans.
To get the lowest interest rate Personal Loan Offers, please visit www.mymonymantra.com, an online lending platform that offers financial products of 60+ banks and other financial institutions.
9. What is processing or origination fee?
It is a fee charged upfront by lenders for processing a loan. It usually varies between 1-2% (this differs from lender to lender) of the entire loan amount.
This fee is deducted from the loan amount prior to disbursal of funds to your bank account. There are a few lenders who do not charge this fee; instead, they increase the rate of interest to cover the processing cost of a loan.
If you wish to apply for a Personal Loan to fund your immediate financial needs, visit www.mymoneymantra.com, or speak to our Loan Specialists toll-free at 18001034004.