A personal loan is an unsecured loan that intends to fund immediate financial need. A key feature of personal loan is its flexible end-use, whether it be for business capital, marriage, education or even foreign trips. However, the end-use of funds depends on the borrower, as long as it is for a legitimate financial purpose. Here are a few tips on choosing the right personal loan.

  • Online Personal Loan

In the olden days, one had to stand in a queue for hours and complete all the paperwork for a personal loan. Today we have options to apply for loan applications digitally from the comfort of our homes. Many banks and NBFCs now have websites and online applications where you don’t have to travel or wait for days to get the loan physically. The online personal loan application makes everything a lot simpler than the usual offline process.

  • Safety and Security

During the loan application, you’ll be asked to provide documents like proof of your salary, residence, and bank statement details. Such information is considered crucial, and one might misuse your credentials for personal benefits. Select a lending institution where you can rest assured that your information is safe and used purely to process your loan.

  • Repayment Tenure

Look for lenders that offer flexible repayment tenure for loans; this will help you ease the pressure of paying EMIs and avoid defaulting payments. Payment delays will only affect your credit score, putting your assets at risk. Most lending institutions provide flexible repayment tenure, making it easier for you to opt for an EMI that doesn’t put you or your family under any financial stress, and you can make the payments on time without fail.

  • Interest Rates on loan

One of the most important aspects is to check the interest rate charged on the personal loan. Higher the interest rate, the higher the amount you’ll be paying back to your lender. Ideally, it would be best if you chose a comfortable tenure while trying to lower your interest rate for that tenure. Before applying for a personal loan compare all the lenders offering personal loans and choose the one that offers a low interest rate on the loan amount.

  • Loan Disbursal

When getting a personal loan for emergencies, you will require access to money. It would be best if you looked for lenders that offer faster loan disbursal processes. Check for the disbursement period. Most banks and lending institution’s loan process is done digitally; you can fill in the online application forms, submit the required documents and once the application is verified by the lender the loan application will get approved. The loan funds can then be used to help with your emergencies.

Loan Eligibility Criteria

The loan eligibility criteria vary from one lender to another. Here are the essential loan eligibility criteria for a personal loan

  • The applicant needs to be between the ages of 23 and 55 years
  • The employment status and details with a private or public company or working with a multinational company (MNC)
  • An individual with Indian citizenship is eligible for a loan
  • The applicant’s income should be based on their location; a minimum net monthly salary must be between INR 25,000 and INR 35,000

Many lending institutions also have a personal loan eligibility calculator designed to give you an estimate of the personal loan amount you can get. All you need to do is select your city, age, monthly income and monthly expenses, and you will get an estimate of your loan amount. To get your loan approved, you must maintain a good credit score. You can do so by making your payments on time without skipping an EMI, or your score is more likely to drop. When you have a low credit score, it becomes difficult to get a loan. Most loan applications are rejected because of a low credit score. Make use of a personal loan eligibility calculator to check how much personal loan you are eligible for, given your current financial situation. You can use the Finserv MARKETS personal loan app to apply for a personal loan in quick and easy steps.

By Chakraborty

Dr Chakrabarty is the Chief Innovation Officer of IntuiComp TeraScience. Earlier she was Assistant Professor of Delhi University, a QS ranked university in India. Before that she has held research positions in IIT Mumbai, IIT Chennai and IISc Bangalore. She holds 2 patents and over 20 research publications in her name which are highly cited. Her area of research is in smart technologies, integrated devices and communications. She also has a penchant for blogging and is an editor of Business Fundas.