What is Personal loan?
A personal loan is a type of consumer loan that is used for a variety of purposes. People take out personal loans to pay for weddings, home renovations, vacations, private school tuition, medical procedures and more.
People often use personal loans for debt consolidation, such as paying off credit cards. If, for example, you have credit card debt at an APR of 18%, you will save hundreds or thousands of dollars if you take out a personal loan at an 8% interest rate and use that money to pay off the credit card debt.
Personal loans, sometimes called signature loans, are unsecured loans, which mean they don’t have any collateral behind them. Student loans or payday loans are another form of unsecured loan.
Because a personal loan is unsecured, interest rates are higher than they would be for a secured loan. Current rates for personal loans range from 4% to 36%, depending on the amount of the loan, the term or length of the loan, and the borrower’s credit scores.
Types Of Personal Loan:
There are two types of personal loans secured and unsecured
Unsecured loans are not backed by collateral. The lender decides whether you qualify based on your financial history. If you do not qualify for an unsecured loan or want a lower interest rate, some lenders also offer secured options.
Secured loans are backed by collateral, such as a savings account or CD. If you are unable to make your payments, your lender typically has the right to claim your asset as payment for the loan
How can i get Personal Loan with lower interest rate?
Personal loan is a multipurpose loan to cover a variety of general expenses such as medical bills, home renovation, exotic vacation, and so on. While rate of interest for a personal loan is lower than other for other unsecured debts, like credit card, interest on a personal loan is higher than that on home loan and car loan just because a personal loan is unsecured loan.
How to get a personal loan at lower interest rate
Here are some tips to get the best rate on your personal loan:
Improve your credit score
Your credit score plays important role to determine your eligibility for a personal loan. If you have a rich history of managing your financial responsibility, the lender will consider you as a less risky applicant. Higher your credit score lower interest rate you will be eligible for.
You can improve your credit score in months by following these steps.
· Clear all your credit card outstanding dues before the due dates
· Make sure any errors in your credit card report are informed to credit agency
· Never utilize more than 30% of credit amount because this will establish your credibility for financial discipline and management
Shop around for the best deal
Each lender set different criteria for loan approval, so don’t get tempted to get the first loan you see. Get rate offers from different lenders. Some lenders have higher rate of interest than others, so due comparison is necessary.
It is to be noted that interest rate doesn’t give the clear picture. Fees and type of interest rate – fixed or floating – should also be taken into account so that you can calculate the cost of the loan throughout the term.
Compare personal loan APRs – not just base rate
Annual percentage rate (APR) gives you a better idea of what your loan cost is or how much you will be required to pay each year. However, keep in mind that penalty charges like prepayments or late payment charges usually aren’t included in the APR. If you think that you will pay off your loan ahead of the defined tenure, consider looking for a loan with no or lower prepayment fees.
Choose for shorter personal loan tenure
Choosing a short personal loan term will reduce the amount payable in the form of interest. However, make sure that short loan term allows you to borrow the amount you need and doesn’t eat a big chunk of your monthly salary in the form of EMI.
Don’t apply for multiple loans at once – use soft searching instead
Multiple loan applications can hurt your credit score and you are less likely to get the best loan rate even if you have a good credit record. To avoid this, you should explore online tools which use just the key information about you to tell you which products you are eligible for. Soft search are not seen by lenders so you can try this as much as you want.
Add a co-applicant
You can add a co-applicant with a good credit score to improve your eligibility. When you add a co-applicant to your personal loan application, lender considers your and co-applicant’s credit history and financial behavior. Declaring a woman the principal borrower would help you get a personal loan at lower interest rates.
Opt for a secured loan
While a personal loan doesn’t require any collateral, you can submit any collateral or asset like property paper, gold, fixed deposits etc. An asset acts a guarantee of the personal loan, reducing the likelihood of risk as lenders can retrieve loan amount if you are unable to repay. Also, when secured by any asset, many lenders provide loan for lower interest rate.
Documents Required For Personal Loan:
To take a personal loan only few documents are required. Personal loan is a unsecured loan so it is easy to get for any emergency.
Documents for Personal Loan
- Valid Proof of Applicant’s Identity (any one of the following): Voter ID Card/Passport/PAN Card/Driving License
- Proof of Residence (any one of the following): Ration Card/Passport/Utility Bill
- Proof of Age (any one of the following): Voter ID Card/Passport/PAN Card/Driving License
- Income Proof: Latest 3 month’s Salary Slips and Form 16.
- Job Continuity Proof: Current Employment Certificate or Current Job Appointment letter and Experience Certificate
- Bank Statement: Latest 6 month’s statement from bank
- 1 Passport size color Photograph
- If there are existing loans submit Payment Track Record and sanction letter
These are the common documents for salaried individual
Personal Loan By Various Category
personal loan for low cibil
Don’t get disheartened by the fact that you have you have a low CIBIL score. We understand that sometimes we fall under the unfortunate bracket where we are unable to pay back on time or take unnecessary burdens on us to fulfill our necessities. These eventually affect our credit score and end up having a bad credit history.
But, we realize this effect when going to a bank or NBFC to apply for a Personal loan or credit card and they simply reject your application. That is the time, we get to know the hard fact that we are under that category. But, you need not worry, because every adverse situation has some simply solution too. In this situation, you first need to have some patience, don’t panic!
Check and calculate your current CIBIL score. If it falls into the bracket of 500 to 650, then it will be considered as a medium credit score. In such situation, your personal loan application may be rejected from some banks, but you should try in NBFCs. Generally, NBFCs have fewer rules and regulations than a bank. So, it is easy to get a loan from there.
But, in case, your CIBIL score is below 500, then it is a low credit score. You had a bad credit history which is getting reflected in your credit score. This time, you have to wait for some time, work a little hard and improve your CIBIL score.
Here are some simple steps to improve your CIBIL score from 300 to 900:
- Pay off your due bills
- Pay your EMIs on time
- Do not apply for a new credit card
- Close or submit if you have any unused credit cards
- Limit your utilization of credit limit
These are some easy steps that can be followed to turn a bad history into a good history.
personal loan for government employee
- No need of security/collateral –
As a government job is deemed to be a stable and a secured one, lenders do not often ask for a security. Some lenders even run special schemes to woo government employees in different sectors. For example – personal loans for government employees are offered at low interest rates to ex-army or defense personnel.
- Convenient documentation-
Regardless of which government sector you are in, personal loans for government employees can be obtained with a minimum documentation.
- Easy repayment options-
A large section of the banks/NBFCs offer easy and flexible repayment options to government employees. A usual repayment tenure falls in the range of 12-60 months. Some lenders even offer prepayment facilities to government employees with zero processing fees.
personal loan for pensioners
The banking and financial system in India has considerably transformed itself. Not only they have flexible policies and features for the customers but now the banks and NBFCs extend their loan schemes to the retired people and pensioners as well. The pensioners can now easily apply for the personal loan online and can fulfil their aspirations or meet the financial needs in case of an emergency.
The pensioners’ loan offered by bank allows the pensioners to take the loan against FDs, pension, National Saving Certificates, etc. Despite many banks and financial institutions reluctant to give the loan to the pensioners, some of the prominent banks like State Bank of India, Dena Bank, Bank of Baroda, PNB, etc. provide the personal loan to the pensioners quite easily. One can check whether he will get a personal loan for pensioners by clicking here.
In this blog, we will discuss in detail about the personal loan offered by banks to pensioners. Although eligibility criteria for most of the banks remain the same, the interest rates may vary from one bank to another. Here is the detailed list of the same:
1. State Bank of India Pension Loan
State Bank of India- SBI is one of the leading government banks in India that also offers the personal loan to the pensioners. The bank extends the loan to retired Central and State Government. The objective behind this loan is to help the pensioners meet financial needs.
Processing Fees: The defence pensioners are not charged any processing fee. For others, the processing fees can be up to 0.5% of the loan amount plus taxes. This minimum processing fees charged by SBI is ₹ 500 plus taxes.
Loan Limit: Minimum Loan Amount – ₹ 25,000
Maximum Loan Amount – ₹ 14,00,000
Interest Rate: 13.05% per annum.
Repayment Period- Before the pensioner reaches the age of 75
Eligibility for SBI Pension Loan:
1. The pensioners should not be more than 76 years
2. Central and State Government retired professional can apply for this loan
3. Retired Central and State Government employees
2. Central Bank Of India Pension Loan
Central Bank of India – This leading bank provides personal loan to the pensioners and retired professionals. Central Bank of India offers a lucrative interest rate and there is no processing fees thus making it easy for the pensioners to avail the loan.
Processing Fees: There are no processing fees
Loan Limit: ₹ 5 Lakhs for the pensioners who are below 75 years and ₹ 2 Lakhs for the pensioners who are above 75 years.
Interest Rate: 11.70%
personal loan for self employed
Self employed personal loan are individuals who are not salaried and earn their income by running their own incorporated business. Self Employed can be divided into 2 categories
- Self employed professionals: Banks categories doctors, dentists, surgeons practicing from own clinics chartered accountant, architects, consultants, interior designers as Self Employed Professionals (SEP)
- Self employed non professionals: These are business which are not categorised under self employed professionals and can be manufacturing, trading or services business enterprises
Personal loan for agriculture
In India, the need to empower the agriculture sector is essential and it is more important to empower the farmers first. Any business or self-run trade profession needs funding at one time or another. Usually, most individuals obtain loans for their funding needs and agriculture is no different. Almost every nationalised bank and a few private sector banks offer agriculture loans. Financing the farmers will also lead towards making the marginal and small agricultural units economically viable and turning wasted fallow land into productive farmland.
Agriculture loans are a specific financial instrument that can both empower the farmers of the country and help develop land lying fallow into irrigated farms. Agriculture loans are similar to business loans despite the fact that they are granted for agricultural purposes. The government of India also backs most of the schemes and sub-schemes that fall under the category of agriculture loan.
Scope of Agriculture loan
Agriculture loans are granted for seasonal agricultural operations or for allied agricultural activities such as animal farming like pisciculture. Agriculture loan can also be granted for purchasing farming equipment or agricultural vehicles like tube wells or tractors. The scope of agriculture loan does not end here. Such loans can be granted through Kisan Credit Card and several other mediums so that the farmers can utilise the money in the easiest and best possible way. The loan can be sanctioned for a variety of operations related to agriculture such as sowing, weeding, transplantation, seeds, fertilisers, insecticides, etc.
Banks offer two types of agriculture loans – short-term and long-term. Long-term loans are intended for investment purposes whereas short-term loans are for production oriented funding.
Agriculture loans are granted to all farmers in the country who cultivate on agricultural land. However, they just have to fall in the age category of 18 to 70 years.
Minimal documentation is required to make the loan application and approval process simpler and trouble-free. Farmers only have to submit valid their valid ID and address proof. They can submit Aadhaar card, voter ID card, ration card, PAN card, driving license, etc. as proof of identity. Lease or rent agreement, recent utility bill, bank statement, etc. can be used as the proof of their address.
Personal loan for low income
You never know when a need or requirement for money knocks on our door and many a times, we do not have enough savings to take over the financial challenge on our own. Personal loans exist for this very reason, to help take on any personal financial requirement with ease. However, not everyone qualifies for a personal loan due to the eligibility criterion of minimum income. If we are still on our first jobs and are barely managing to scrape by through our monthly expenses, how can we apply for a personal loan with such low salary?
Luckily, there are quite a few banks in India today that offer personal loans to applicants with monthly incomes starting at just Rs.10,000. What follow are some of the popular personal loans offered by banks for those with low salaries?
Axis Bank Personal Loan for Salary Persons
If you are looking for a quick approval and a minimum documentation process, then you can apply for a personal from Axis Bank:
- Loan amount – The minimum loan amount offered is Rs.50,000 and the maximum loan amount offered is Rs.15 lakhs.
- Age – You must be at least 21 years of age and not older than 60 years.
- Repayment tenure – You can choose between flexible tenures starting at 12 months and up to 60 months.
- Interest rate – The interest rate for this loan starts at 15.50% and up to 24%.
- Processing fee – You will charged between 1.50% and 2% + tax as processing charges for this personal loan.
- Balance transfer facility is available for this personal loan.
- This loan does not charge any prepayment or foreclosure fee.
Income criteria for Axis Bank Personal Loan:
The minimum net monthly income required to apply for this loan is Rs.15,000.
HDFC Bank Personal Loan for Salary Persons
HDFC Bank offers personal loan at competitive interest rates with 0 hidden charges:
- Apply online and get In-Principal loan eligibility just 1 minute.
- Even first time borrowers are eligible to apply for this loan.
- The bank offers special offers for women customers. Women can get a pre-approved loan of Rs.3 lakhs under the Personal Loan Diva Loan.
- Age – You must be at least 21 years of age and not older than 60 years.
- Interest rate – The rack interest rate for salaried employees is between 15.75% and 20%