Personal loans are sought-after by millions of Indians. In other words, a borrower can avail of personal loans for any legitimate financial requirement and is not obligated to declare the purpose to his lender. All banks – public sector, private sector and MNC banks across the country offer personal loans to their customers. It is important to note that in most cases, salaried individuals, self-employed professionals such as lawyers, doctors, chartered accountants and so forth, employees of public and private limited companies, MNCs, public sector units, local bodies and self-employed individuals (businessmen) can avail of personal loans in India.
However, there are several factors which are taken into consideration such as the employment history, age, place of current residence, monthly net income, repayment capacity, previous loans and employers among others. Given that personal loans are a highly popular financial instrument, banks offer competitive interest rates. Loan seekers can compare personal loan interest rates across various banks online.
Criteria for getting a personal loan
Loan seekers have to ensure that meet various criteria to acquire a personal loan without any hassles. Some of the important parameters to be considered by loan seekers to get personal loans are listed below:
- Age: The minimum and maximum age to avail of personal loans is 21 years and 60 years for Axis Bank and 23 years and 58 years for ICICI bank. In some cases, the age bar may differ depending upon the occupation and professional status of a loan seeker. For instance, the minimum age for self-employed individuals is 28 years whereas for doctors, it may be 25 years.
- Loan Amount: In most cases, the minimum loan amount which can be availed is Rs.25,000 while the maximum is Rs.15 to 20 lakhs. All the same, customers should get quotes from different banks to get accurate figures
- Rate of interest: The rate of interest may vary across banks ranging from 15.50% to 24% p.a.
- Purpose: Personal loans can be acquired for any purpose such as funding vacations, tuition fees, child’s education, wedding and home renovation among many others
- Minimum net income: ICICI bank requires a salaried individual to have a minimum net income of Rs.17,500 per month to avail of a personal loan while Axis Bank requires a loan seeker to have a monthly net income of Rs.15,000. Most banks offer Rs.15 to 20 lakhs as personal loans to eligible customers.
- Eligible individuals: Salaried individuals, lawyers, doctors, chartered accountants, architects, engineers, public and private sector employees in addition to self-employed individuals such as businessmen can avail of personal loans in India
- Security: Many banks do not demand any collateral for a personal loan, subject to conditions. For instance, no guarantors are required to avail of personal loans from ICICI bank
- Loan approval: Most top banks take 24 to 72 hours to approve a loan request, provided all the required documents are in order and the customer has a clean repayment history and a good credit score
- Repayment tenures: Many top banks offer a flexible repayment tenure ranging from 1 year to 60 months
- Repayment methods
- Standing Instruction (SI): Individuals who already have salary accounts with their banks they are seeking personal loans from can avail of this facility
- Post-Dated Cheques (PDCs): Individuals can issue EMI cheques (post-dated) regularly
- Electronic Clearing Service (ECS): Individuals can also make use of this facility wherein EMIs are automatically debited every month from the bank accounts
- Top-up facility: Many banks such as ICICI bank offer top-up facility on personal loans provided EMIs for a year are paid by customers
- Balance Transfer facility: Several banks offer the balance transfer facility, subject to specific conditions. For instance, ICICI bank offers the balance transfer facility to customers upon payment of 12 EMIs
- Documentation: While documentation required to avail of personal loans may vary from bank to bank, the following are some of the common documents requested by most banks
- Filled-in application form
- Age proof
- Bank statements (three to six months)
- Proof of income
- Proof of residence
- Registration proof qualified professionals such as architects, consultants, company secretaries, chartered accountants and engineers
- Loan Agreement
- Post Dated Cheques or request for Standing Instructions