Personal Loan
A personal loan refers to money that is borrowed from a financial institution, for personal (not professional or business) use. In opposition to larger and long-term loans, personal loans are taken into relatively short to medium terms. Generally personal loans are used to pay for one-time or short term expenses where a borrower (the person who is getting the loan) doesn't normally require disclosing the specific reason for the loan. This type of loan is used by many to resolve their current financial needs. A personal loan is taken for tenure of one to five years. Also these require lowest formalities and no collateral or security. It is a type of unsecured loan which can be availed on the basis of various criteria. Level of income, employment history, credit score and scope for repayment are those specific criteria. Considering these criteria and lender, the APR (Annual Percentage Rate) of personal loan can be anywhere between 11.29% to 35%.
Personal Loan - Eligibility
Banks offer personal loans to customers who fulfill their designed eligibility. The eligibility criteria changes from bank to bank and the profile of the borrower. But there are some commonalities which you have to follow or acquire to get a personal loan from any bank. Banks give personal loans by dividing their customer's profession and their income history. You can refer the following table for a gross understanding of bank's eligibility criteria:
| Particulars | Salaried Borrowers | Self-Employed Borrowers |
|---|---|---|
| Age | 21 years to 60 years | 23 years to 60 years |
| Income | Rs. 15,000 (Rs. 20,000 in metros) | Minimum Turnover - 24,00,000 |
| Minimum Loan Amount Approved | Rs. 75,000 | Rs. 75,000 to Rs. 3,00,000 |
| Maximum Loan Amount Approved | Rs. 15,00,000 | Rs. 15,00,000 to 20,00,000 |
| Loan Tenure | 12-72 months | 12-48 months |
*The eligibility criteria differ from bank to bank. The above details are generic, not specific.
What are the Documents Required to avail a Personal Loan?
| Particulars | Salaried Borrowers | Self-Employed Borrowers |
|---|---|---|
| Identity Proof | Passport, Driving License, Voters ID or PAN Card | Passport, Driving License, Voters ID or PAN Card |
| Address Proof | Passport or utility bills | Passport or utility bills |
| Additional Documents | Salary slips for last 3 months | Proof of highest professional degree |
| Proof of highest professional degree | Latest Income Tax Return Balance sheet | |
| Profit and Loss for last 3 years certified by CA |
*The list of documents differs from bank to bank. The above given list is generic, not specific.