How To Get A Personal Loan In 7 Easy Steps

A personal loan is a cash credit that one can borrow from a bank or lending institution. It is a cash advance that funds the urgent and short-term financial needs of the borrower. The loan proceeds under a personal loan can be used for any purpose like education, repair and renovation of the property, expansion of business, to meet medical emergencies, marriage, vacation, repayment of existing debt, etc. Unlike other loans, the borrower of a personal loan is not required to furnish an end-use certificate. 

Furthermore, no security or collateral is required for a personal loan. Therefore, the maximum loan that a person can apply for will depend on his current income and credit score. The terms and conditions of a personal loan, like rate of interest, repayment tenure, etc., differs from bank to bank. Thus it is recommended that a personal loan applicant carefully evaluates loan offers from different banks to pick the most viable bid.

How to Get a Personal Loan in India 2021?

Are you wondering how to get a personal loan in India? Thankfully with changing times, the process of applying for a personal loan has got more straightforward and stress-free. Traditionally, a prospective borrower was required to move from bank to bank in search of that perfect loan bid. But with online banking taking centre-stage, it’s now the other way round. The lending institutions, through their official websites, are now just a click away. 

To make the personal loan application process even more convenient, MyMoneyMantra brings together comprehensive information about personal loans offered by different lenders on its online portal. This not just cuts down the undue hassle of searching various websites but also aids in clear comparison. It also helps evaluate the terms and conditions of personal loan deals offered by different lending institutions.

How to get a personal loan in 7 easy steps:

Step 1 – Know your Requirement

The purpose and quantum of loan required must be clear before starting your search for a personal loan. The amount that you borrow has to be repaid along with the interest charges thereon. So applying for a higher amount than what is required will turn out to be an expensive deal. On the other hand, applying for less than what you need might not fulfil the purpose. Also, one might end up applying for another loan to meet the shortfall. This will entail duplication of loan processing charges. So, carefully assess and evaluate your requirements before you proceed further.

Step 2 – Check your Credit Score

A personal loan is issued without security or collateral. Your creditworthiness, checked through your CIBIL score, matters most. So, check your credit score beforehand. You can also pre-plan for your personal loan and try building your credit score over time. Making timely payments on credit cards and other loans is the key to boost your credit score.

Step 3 – Understand and Compare the Deals

One can check and compare the deals of different banks on MyMoneyMantra. Read through the fine lines of the terms and conditions and carefully understand the features, repayment terms, etc., of different lending companies. Shortlist the ones that appear most lucrative.

Step 4 – Check Personal Loan Eligibility

For a lending institution to process a personal loan application, the applicant must meet its eligibility criteria. While the broad features in personal loan eligibility remain more or less the same, a few tweaks here-n-there with regards to age, minimum income, repayment term, the quantum of loan, etc., can disqualify the applicant. So, it is advisable to check the eligibility criteria of the desired lending institution before proceeding further.

Step 5 – Calculate the EMI and Select Loan Tenure

The personal loan is to be repaid through EMIs (equated monthly instalments). A portion of the principal amount and interest thereon will make up an EMI. As the loan term increases, the interest component goes up, making the loan expensive. But a longer loan term has more months in which the loan is to be repaid. Therefore the value of EMI reduces. So, one must carefully balance the two aspects to reach the perfect EMI amount and then pick the corresponding loan term.

Step 6 – Apply Online

Once all the above-mentioned steps are handled, one simply has to apply for a personal loan at the selected lending institution. MyMoneyMantra’s self-explanatory navigation will resolve the ‘how to get a personal loan’ worries. The form for the online application asks for the required loan amount, the desired repayment term, etc. Fill in the details needed before you submit the application. A loan tracking ID will be issued. This ID comes in use for all further correspondence with the bank.

Step 7 – Submit Documents

After receiving the personal loan application, a bank representative will get in touch with the prospective borrower. The applicant is required to furnish proof of income, address and identity. The bank executive will verify the documents. The loan proceeds are transferred to the loan account of the applicant post verification of documents.

Best Personal Loan Options Available in India

Scores of banks and non-banking financial companies are into the personal loan business. Though the broad guidelines for a personal loan remain the same, each lending institution offers a personal loan with a distinct clause that differs from the others. Mentioned below are the 5 best personal loan options available in India.

SBI Personal Loan

A leading public sector bank, the State Bank of India offers personal loans under various categories. The ROI depends on the loan category, loan term and other eligibility conditions. The key features of SBI personal loan are:

HDFC Personal Loan

HDFC Bank is yet another leading personal loan provider in India. Its personal loans come with a unique array of features and benefits. Depending upon the loan term, loan amount and eligibility status of the applicant, the bank will provide the terms and conditions regarding the rate of interest and processing fee.

ICICI Bank Personal Loan

ICICI Bank is the second-largest private sector bank in India. The interest rate the bank charges on a personal loan will depend on the applicant’s loan term, loan amount, and eligibility status. The ICICI Bank personal loan is lucrative because of the following reasons:

IDFC First Bank Personal Loan

IDFC FIRST Bank was incorporated in December 2018. It soon rolled out products that were lucrative and attractive. The personal loan by IDFC FIRST Bank charges an interest rate directly linked to the loan profile of the customer. The key features are:

Axis Bank Personal Loan

Axis Bank Personal Loan comes with a range of attractive features. It is one of the leading personal loan providers in India. Its personal loan features include:

What is the Eligibility Criteria for Personal Loan in India?

Personal loan in India is sanctioned without any security or collateral. Thus, being an unsecured loan, only those applicants who meet the requisite eligibility conditions set by the respective lending bank can avail of a personal loan. The eligibility conditions vary from bank to bank. However, they all fall under a broad framework. Listed below are the general eligibility guidelines for availing of a personal loan in India:

Documents Required for Personal Loan in India

To process the personal loan application, the lending bank will request supporting documents. Again, while different banks accept different documents to validate the application, the overall structure remains the same for almost every bank. The documents are primarily divided into three categories – address proof, income proof and identity proof. The documents deposited with the bank must be self-attested in all cases. The documents required for the same are:  

Conclusion

These days there are both offline and online modes of applying for a personal loan. But before proceeding, one must clearly evaluate the loan requirement keeping in mind the repayment term and EMI amount. Since personal loans are essentially unsecured with no need for security or collateral, their interest component is higher than secured loans like car loan and home loan. Thus, choosing the lending institution that has personal loan’s features and clauses that match your requirements is crucial in your ‘how to get a personal loan’ search.

Frequently Asked Questions

✅How can I qualify to get a personal loan?

The simple answer to ‘how to get a personal loan’ is to qualify for the same. The main personal loan requirements include being over 18 years of age, good credit history and a decent income to pay off the monthly liability. Loan seekers who qualify on these grounds can apply for a personal loan.

✅ Why are personal loans expensive?

Unlike secured loans like car loans and home loans in which the associated asset is kept as security, personal loans are unsecured. They do not require security or collateral. Thus they come at a higher rate of interest as compared to secured loans. But choosing a lending bank that charges a low interest rate and opting for a shorter repayment term can make the personal loan less expensive.

✅How can I get a personal loan for the first time?

Personal loans are directly linked to your financial standing and previous credit history. If you are a first-time applicant and do not have a credit history, you’ll have to provide documents showing a decent income to pay off the monthly liability.

✅What is the minimum CIBIL score to avail of a personal loan?

CIBIL score is measured on a scale of 300-900. Higher the score, the better it is. However, a CIBIL score of 750 points is acceptable when applying for a personal loan in India.

✅What reduces the CIBIL score?

Delay and default in repaying existing liabilities reduce CIBIL score. Likewise, paying the Minimum Amount Due on a credit card will lower the CIBIL score and decrease your creditworthiness.