Personal Loans can be a lifesaver for many people; a Personal Loan can be used to finance needs like education, festivals, and medical emergencies. Some of these needs can surpass your financial capacity, which can be covered with the help of loans. Loans can be availed by any individual from any NBFC or financial institution. It is important to know that the banks have a stringent and longer procedure for sanctioning the loan, whereas, the NBFCs provide loan faster and with fewer documents.
Availing Personal Loans is not a tedious task, but you need to have prior knowledge about certain things before applying for a loan through a private lender or NBFC.
Personal Loans are mostly unsecured as lenders generally do not ask for collateral while approving a loan. Due to the lack of collateral, unsecured Personal Loans have a high-interest rate. The applicant needs to keep in mind that defaulting on your Personal Loan debt repayment will be shown in your credit score. If your Personal Loan application is rejected, any lender, in the future, might think twice before approving your Personal Loan application.
Easy and convenient
The documentation process for a Personal Loan is easier than any other loans. The documentation for a Personal Loan involves your income, credit score, and your eligibility, (while there are other formalities like application forms and KYC documents). To make the application process easier, the applicant can apply for Personal Loan online from the website of the lender.
- Income: To apply for a Personal Loan through NBFCs, you need to make sure that you have sufficient income, which can be allocated for the repayment of the loan. You can use the EMI calculator to manage your loan and to get an estimate of your monthly instalments. Using the EMI calculator is very simple and the calculators can be found on the lender’s website. To get the estimate of your EMI you have to enter your loan amount, the rate of interest and the tenor of the loan.
- Credit score: The credit score is the prime factor of eligibility for the loan approval. You need to have 750 points as your credit score to get your loan approved by the banks. If your credit score is lower than 650 or 600 points the lender might not approve your Personal Loan.
In such cases, you can apply for a Personal Loan through NBFCs. There are NBFCs who also provide a loan to applicants who have a lower credit score.
- Eligibility: The lenders determine your eligibility for the loan by checking your income, job history, and banking history. Apart from income, the lenders provide Personal Loans to the applicants who have a job history of 3 years or more
Fixed interest rates:
The interest rate is one of the most important factors while applying for a Personal Loan. The rate of interest on Personal Loans is fixed. A fixed rate of interest means you will be able to determine exactly how much EMI you have to pay every month.
The above point can help you understand the basics while applying for a Personal Loan. It is not too hard to get a Personal Loan from the NBFCs and lenders as they are more flexible with their terms and conditions and are quicker than the banks while sanctioning the loan amount. If you have a better credit score, income, and eligibility, you can even apply for a higher loan amount.