How to Take Personal Loan
People keep saving all their lives and for good reasons, they are used for purchasing different types of physical and financial properties including shares, fixed deposits, gold and diamond jewelry pieces and more. People usually apply for a personal loan to fund their financial needs during emergencies.
What is a personal loan?
Personal loan SBI is a type of unsecured loans that can be extended by various financial institutions. It is termed as unsecured because the schemes do not carry the needs of collateral. The loans are simply approved based on the credit history and checking the ability of the applicant so that he can repay the amount with interest based on the current personal income.
When it comes to interest rates, the percentage is usually not fixed for every financial institution. Therefore, the rate of interest differs based on the issuer and its terms and conditions. However, the interest rate approximately ranges from 11 to 37 per cent per annum. Well, before applying for a personal loan, there are certain things that should be kept in mind so that the process gets approved without any glitch.
Maintaining a good credit score
A credit score is termed as a CIBIL score that represents the creditworthiness of a borrower. This measured on the basis of credit repayment history. The credit score ranges from 300 to 900 and usually, an ideal figure is considered, when the score reaches above 750. When the credit score is low, it depicts bad debt management may sometime lead to rejection of loan application. Even if the loan gets approved, the interest rate becomes higher in these cases.
A healthy credit score can be maintained by paying the dues on time. A good choice of ensuring this is to automate your payments so that the payments can be made right on time. Also, you can choose to reduce the number of credit cards and continue using a single one with a good credit score. Make sure not to cross the limit of credit utilization (30%) to achieve a quick approval.
Comparing the interest rate in the market
As there are various lenders in the market, comparing the interest rate will ensure that you get the lowest rate. Even there are different platforms from where you can easily compare the rates of various financial institutions and get an instant personal loan based on your demand. These platforms will help you in figuring out the type of interests that are suitable for you. In the form of EMIs, these payments can be made after a certain period.
Personal loan eligibility is an important part if you want to get your loan approved. The criteria should be met accurately to avoid rejection. Most of the applicants overlook the terms of conditions and even misread the eligibility criteria before applying for a loan. It has been seen that a number of loan applications are lodged from borrowers even if they don’t meet the requirements.
Remember, every single criterion must be met in order to get your application approved. The minimum age for applying for a loan in India is 21 and the maximum is 60. Make sure to show all the required documents including tax returns, credit reports, income certificates etc.
Assess the costs
When an applicant borrows a loan, there are numerous costs that come into play. These are prepayment fees, processing fees and late payment fees. Compare these charges offered by the lenders before setting up to a final decision. Personal loan apply has been made easier these days with various online approaches. This will also help you in having a clear estimate of the total expenditure. Determining the additional costs will help you in managing the finances properly and ultimately getting into a decision whether or not, the loan is affordable for you.
Prioritize your needs to get the right loan amount
Consider making a list of all the needs and requirements on the basis of priority and then calculate a rough figure for the loan. Some of the common purposes of taking a personal loan HDFC are:
· Financing a wedding
· Buying a vehicle
· Addressing medical emergency
· Planning a holiday
It is pivotal not to apply for high amounts, as after all, you will be liable to pay the interests. Moreover, an extremely huge amount may lead to rejection. Therefore, the need of borrowing must be recognized at the very first stage. When it comes to an online personal loan, always stick to an amount that never exceeds your financial capabilities. Today, most lenders conduct a thorough check of your personal income before giving approval.
Financial instruments against which a loan can be issued
People have a number of options (financial instruments) against which a loan is approved by a lender. These constitute to:
Loan against residential property
Residential properties are shown as an asset to get a loan. The borrower can apply for a loan based on 60 to 70 per cent of the property’s value. The maximum tenure is 15 years for the loan and the interest rate ranges from 11 to 15 per cent per annum.
Loan against shares
A person is eligible for an instant loan if he/she has made investments in equity shares. Here, the interest rates range from 11 to 22 percent per annum. The value and tenure of the loan depend on the lender or NBFC.
Loan against gold
A loan can also be applied against physical gold. As per the norms mentioned by RBI, the maximized loan to value is 75%. The loan is sanctioned for a maximum of a year and the interest rate ranges between 12 to 17 percent per annum.
Personal loan online apply is a far better process for all types of applicants. However, if the norms and conditions are not understandable, it recommended consulting with a specialist who can provide an apt knowledge of loan and interest rates.
Short terms loans can be planned against physical gold and shares, while fixed deposits are a good choice for both long and short term loan applications.