Financial stability is a necessary factor in everyone’s life. It gives not only peace of mind but also better control over things. However, there might have some obstacles, like unforeseen expenses that stimulate monetary trouble.
Personal loans have become an important tool for tackling this situation. They offer a convenient and adaptable alternative for those needing financial assistance. To assist you in making informed choices when this alternative, we’ll discuss everything from personal loans meaning to the necessary steps in this article.
A Deep Dive into Personal Loans: Definition, Important Tips, and More
Personal loans are unsecured loans given based on credit scores and repayment capacity. Unlike most other loans, personal loans don’t require collateral, meaning you don’t need to offer assets for approval.
The money can be used for various things, including debt consolidation, medical expenditures, home improvements, etc. Here are some tips to get approval easily:
Maintain a Good Credit Score
Before requesting a personal loan, keep a good credit score. Lenders offer lower interest rates for such applicants along with other benefits.
Make Use of an EMI Calculator
Use an EMI calculator before finalising the loan amount with your lender. This will help you understand your repayment capacity and allow you to budget your finances accordingly.
Discuss Your Existing Debts with Your Lender
Don’t forget to discuss your existing debts (if any) with your lender before proceeding. Lack of clarity with lenders can affect your credit application.
Even if you’re in a hurry to obtain a personal loan, don’t opt for the first lender you come across. It is never smart to avoid research and fall into a financial mess. Compare different lenders and know about their terms and conditions before applying.
The Procedure of a Personal Loan
Now that you’re familiar with the things to remember before a loan application, it’s time to understand the procedure. Listed below are the personal loan process steps:
Check if You’re Eligible
On the official website of the lender, you will find the eligibility criteria for applying for a personal loan. This varies from lender to lender; here are some of the most common things mentioned in the eligibility criteria:
- The applicant must be aged between 21-58 to apply for the loan.
- The applicant must reside in India and have Indian citizenship.
- The applicant must have all the documents required for the personal loan.
Check the Rate of Interest and Other Charges Associated
As mentioned earlier, different lenders have different rates of interest associated with personal loans. If you have a good credit score, feel free to negotiate with your lender to get better deals.
Gather the Required Documents
Keep all your important documents handy before starting the application process. You will require the following paperwork when applying for a personal loan:
- Proof of Identity: Aadhar Card, PAN Card, or Driving License
- Address proof: Telephone bill, Driving License, Bank Statement
- Form 16
- Bank statements for the last 6 months
- Passport size photographs
Fill Out the Loan Application Form
This final step can be completed in the comfort of your home. Head to the official website and find the personal loan section. A form will show up, and you must enter your details as per your personal and financial documents.
Once that’s done, click ‘submit’, and soon, the lender will contact you for further details.
Personal loans can be your ultimate saviour during a cash crunch, making money management seamless. However, make sure that you don’t over-borrow money and spend it mindlessly. Always make decisions with proper planning and start budgeting your finances based on the personal loan’s EMI amount.
Choose your lender wisely and go through all personal loan process steps properly. Experts always advise opting for reputed lenders and discussing loan plans with insurance agents for complete knowledge. Before taking the huge leap, consider your current situation and objectives carefully.