How to Get a Personal Loan in India?

Introduction

Life may anytime put you in a tough financial situation where you have no options other than applying for a personal loan. So, whether it’s a medical emergency, relocation, home renovation, or your child’s education, this loan better manages your financial condition. While many consider it a bane, this loan scheme can be a great boon for all good reasons.

First things first, this loan policy lets you manage your debt better. You can also use it to pay your credit card bills for the time being. You need to be smart enough to pay it faster to avoid high-interest rates. All in all, the following reasons tell you why personal loans are considered a boon amidst your sudden financial complications:

1.    Offers a hassle-free loan process
2.    Instantly disbursed within a few hours
3.    Use it for any purpose
4.    Collaterals are not required against this type of loan
5.    Documentation is convenient and straightforward
 

A Comprehensive Guide to The Steps to Apply for a Personal Loan

Convinced to apply for a personal loan already? Wondering how to get personal loan? Don’t worry; this comprehensive post shall deliver you a few straightforward steps to apply for the loan. Are you ready to dig deep into the given narration? Get an insight into the following steps to learn about the application process:

Step 1: Determine Your Needs First

Before you check your eligibility and approach your bank, determining your requirements is the foundation step. Personal loans come as a saviour solution in your difficult times. You may apply for a loan in any crucial scenario in life. Here are a few times in life when they come in handy:
●    When home renovation exceeds your budget
●    Whether you have planned for a sudden vacation without any financial preparation
●    Give your child financial support to complete their higher education at a renowned yet costly college or university
●    Keep pace with the latest technologies and buy the most current gadgets with this loan
●    Consider a personal loan to fulfil your dream of celebrating a big, fat wedding
●    During a medical emergency, this unsecured loan gets credited to your bank in no time
●    Keep up with many EMIs simultaneously and come out of the vicious debt trap with this loan
Although it’s an unsecured loan, you must issue it by a non-banking finance company or a bank. Since you don’t require pledging any asset as collateral, they are better popular than unsecured loans. But please promise yourself to pay it on time only to avoid excessive interest rates.

Step 2: Assess Your Loan Eligibility

The next step is to assess your eligibility criteria. In India, an individual who meets the following prerequisites can apply for a loan. Refer to the given pointers to get a better understanding:
●    You should be more than 21 years of age
●    You must be an Indian
●    A salaried employee working in an MNC, public, or private company
●    Your monthly salary should be more than Rs. 22,000, depending on the city you reside in
●    Your CIBIL or credit score should be more than or equal to 750
Given below is a list of parameters that affect your personal loan eligibility. Get a thorough reading to learn further about it:
●    Geographic location where you reside
●    Your current income (the higher you get, the higher loan you receive)
●    Your home situation is also a pivotal consideration
●    Your existing credit
●    The company where you work should have a good reputation
●    An excellent CIBIL history will increase your eligibility chances

Step 3: Calculate Monthly Instalments

Computing your monthly instalment will help you choose your suitable repayment tenure. Besides, it helps with maximum budget planning and assesses your repayment schedule.
Not to forget, it determines the most effective loan offer by comparing different lenders. Also referred to as EMI or equated monthly instalment, it comprises the principal portion of the loan & interest.
So, if you want to calculate your instalments, consider following the given formulae:
EMI or Equated Monthly Instalment = Your loan’s principal amount and interest paid on the personal loan.
Hence, EMI = Principal amount + your interest

Step 4: Approach the Bank

The ideal personal loan is the one that fits your needs. So, you need to search for a bank that offers you a loan with the lowest interest rate. Before approaching the financial institution or bank, you must factor in a few aspects, including the following:
●    Processing Fee 
●    The Loan Application’s Ease
●    Lender’s Reputation
Before approaching your bank, it will be helpful if you follow these aspects:
1.    Assess the loan amount that you need from the bank first
2.    After this, evaluate your affordability to repay your loan
3.    Now, it is time to explore the benefits offered by different lenders on the personal loan
4.    After this, you need to consider the lender’s reputation
5.    Lastly, check your CIBIL score before applying for the loan

Step 5: Submit Documents

Applying for a personal loan requires a few quintessential documents. As a new applicant, you may not have a seldom idea about these documents. But first things first, documents play a pivotal role in increasing your eligibility chances. The common documents you need for the loan application are mentioned in the following pointers:
●    Bank statements for the past three months
●    Your address proof (the locality where you reside alongside your permanent address)
●    Identity proof such as your voter, PAN, or Aadhar card
●    You can also submit your driving license
As income proof, salaried individual needs to submit their last three payslips as their income proof. They can also submit their employer’s information.

Did You Know?

In most cases, no pre-documentation process is required for approval to get your personal loan. You only need these documents and submit them accordingly. Only in some cases, the pre-approval process is compulsory. But that is also quite a speedy process. It takes not more than four hours to complete the process.
An applicant needs to submit photocopies of their KYC documents with self-attestation. No original documents are required to submit.
 

Conclusion

So, now you know how to get personal loan. Following the aforementioned steps will help you simplify the process. While borrowing is one thing, repayment is another.
Incidentally, repayment becomes more challenging if a borrower fails to understand the right steps to repay the loan amount. As long as you know the steps for repayment, obtaining a personal loan is not difficult. Hopefully, you will follow these steps and make your approval process easier.