Finance > Loans > Personal loan
Personal Loans
A personal loan is an amount of money which you borrow from a bank, building society or other financial institution. Ordinarily, you will receive a lump sum. In return, you agree to make regular repayments, usually monthly. Assuming you have taken out a repayment loan, some of the money you repay will go towards servicing the loan and the rest of your payment will be used to pay off capital and reduce the outstanding debt.
A personal loan can be a good option if you have a number of debts which you wish to consolidate into one loan. In doing so, you ought to be able to simplify your affairs and often reduce the overall cost of credit.
Banks, building societies and specialist finance companies all offer personal loans, so you will need to shop around. Different lenders have different preferences when deciding which borrowers to take on. As a borrower when you're considering one deal with another, make sure you're comparing like with like. The interest rate to look for is the Annual Percentage Rate (APR).
The APR (Annual Percentage Rate) is a method of providing a true comparison between different personal loan interest rates. It shows the true interest rate of the personal loan you are being offered.
The lower the APR on a loan the better because it means you have less interest to repay - so the loan is cheaper. Interest rates vary. And, it's worth bearing in mind that some lenders are only interested in lending to people whom they regard as a 'low risk'. These people may secure lower interest rates.
Eligibility criteria for taking a personal loan
For Salaried Persons
Minimum age 21
Maximum Age 60
Minimum Monthly Income Rs 5000 and above
Documents Required
Proof of Identity (Passport Copy/ Voters ID card/ Driving Licence).
Address Proof (Ration card Tel/elect. Bill/ Rental agr. / Passport copy/Trade licence /Est./Sales Tax certificate)
Bank Statements(latest 6 months bank statement /passbook)
Latest salary slip or current dated salary certificate with latest Form 16
For Self Employed Persons and Professional ( Doctors / Lawyers / Engineers / Architects ), except for the salary statements above, other documents such as tax return documents, Balance Sheet / Profit Loss Statement of the firm he owns may be required.
Other than the normal interest on the loan, you may be charged a one time processing fee also for your Personal loan.
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