A personal loan is an unsecured loan that you can take out to help pay for any expenses. This kind of loan is an excellent option if you need extra cash to pay bills, invest in your business, or buy something important like a vehicle or home renovation. A personal loan works much like other types of loans—you apply for the money through your bank, credit union, or online lender and then repay the amount at regular intervals over time. A personal loan is a great way to get money quickly and easily.
How much can you borrow?
The maximum amount you can borrow depends on your income and the loan’s tenure. You should check the lender’s website to find out how much they are willing to lend, as it varies between lenders.
Also, your credit score should be a minimum of 600, and you should be between the ages of 21 and 60.
Who can apply for a personal loan?
You can apply for a personal loan if you are a salaried employee or self-employed and have a good credit score. Here are some eligibility criteria:
- At least 18 years old.
- Have valid ID proof.
- Must have a regular source of income (salary) from your employer or business proof that shows a profit in the last two years.
The best part about applying for a personal loan is that they are quick and simple to obtain. You can apply online, by phone, or through the mail. The process usually takes only a few minutes, and you’ll know whether you’re approved within a few hours or several days. You’ll receive confirmation of your funds via email or text message if they’re approved.
Documents required to apply for a personal loan
You need to fill out an application form. You also need to provide documents to prove your identity and financial status. The following documents are required:
- Your name, address, phone number, and email address.
- The name of your employer and its address.
- Your annual and monthly income, as well as the source of this income. If you’re self-employed, include tax returns or other documentation showing your income history and current business status.
- Your PAN card (Permanent Account Number)
- Your Aadhaar card (Unique Identification Card)
- Driving license, ration card or passport as proof of residence address.
The steps involved in a personal loan application process
There are a few steps or procedures that you will have to go through in the process of applying for a personal loan. And here’s a rundown of those steps:
Apply for the loan on the best platform
Once you have decided to apply for a loan, it is time to find out which lender offers the best interest rates and charges.
It would be best if you chose a lender that offers competitive rates and charges. Check their interest rates and fees, reputation, customer service quality, and website for information about their products and services. If you are unsure about the company or lender, you are dealing with. It is best to check if they are regulated by any government agency, such as the RBI or SEBI.
Another thing you need to remember while seeking a loan is that lenders will offer you a loan based on your credit score. If your credit score is good, the lenders will approve your application, and you will get an instant personal loan without asking too many questions. However, if you do not have an excellent or good credit score, you may face some difficulties getting approved for personal loans.
Fill up the loan application form
After choosing a lender, you must fill out an application form with all the relevant personal and financial details. The lender will use this information to assess your eligibility for the loan. Personal details include your name, address, phone number, and email ID.
Financial information includes income sources (salary), employment status (full-time or part-time), etc. Details of the loan you wish to apply for are also provided in this section of their website.
Select the loan amount and the repayment tenor
The amount and tenure of your loan should be appropriate for your needs. For example, if you need a higher loan amount than your standard monthly expenses, then it’s likely that you’ll have trouble repaying the loan on time.
Similarly, if you choose a repayment term that doesn’t align with your cash flow cycle or financial planning goals, then again, there is a chance of not repaying within the stipulated period.
Submit the required documents
Once you have applied for a personal loan with your desired bank, the next step is to submit the required documents. The documents you must submit will vary based on your circumstances and requirements. But generally, include the ones that we mentioned earlier in this article.
Wait for verification
The verification process is a standard practice in the loan sector. It can take up to 3 days to complete, and it helps determine if you are eligible for the loan amount you’ve applied for. Verification checks if your income is enough to pay off your loan comfortably. This ensures that there are no other loans against your name in any other banks.
Wait for the loan amount to be disbursed in your account
Once you have submitted all the documents and gotten your loan approved, wait for a few hours. The entire process will take some time. Once the money is disbursed into your account, you can withdraw it and make payments using any mode of payment that suits you best.
You can now apply for a Rs. 5 lakh personal loan and get the amount in your bank account. Remember, there are many other factors that you should keep in mind before applying for such a loan. So, find out all about them on Piramal Finance, and then getstartedg on your application form!