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Getting a Personal Loan has become a prerequisite to fulfilling an individual financial need Banks and NBFCs offer attractive terms to gain customers that best meet their eligibility criteria.
Gone are the days when getting funds was a long and drawn-out affair Digitalisation has hastened processes, and financers now have the experience and devised methods to eliminate unnecessary delays.
To get funds in time, there is much that an applicant can ensure before applying. A well-planned and researched application with a know-how of the Bank’s criteria will help make the journey successful.
An applicant should be aware before Applying for a Personal Loan if the lenders’ terms are suitable. Below is a checklist that an applicant can take note of to receive funds as desired via a Personal Loan.
The primary check is to confirm if your employer features in the Approved list of companies for sourcing a Personal loan.
Your Personal Loan Application is prioritised according to the category of the employer in the Company Category List of the Bank. Individuals working with top companies have a stable income to honour their timely repayment of all credit. They can quickly get approval with an enhanced loan amount and suitable terms.
Your company could be listed in Category A of one lender, whereas another Bank may classify your employer as Category C. However, if the employer is not listed, the response to the application may not be favourable.
Some lenders, like the ICICI Bank, also provide loans to employees of Non-Listed Companies. Checking if your company is included in the company category list is necessary to ensure that the Bank processes your loan application.
The CIBIL (Credit Bureau of India Ltd) assimilates all credit transactions reported by Banks and Financial institutions and issues a rating per the credit behaviour of an individual. Funds granted as Personal loans are without any security; financiers refer to the CIBIL to give loans to customers who manage their credit well and repay their EMI on time.
A score of 720 points and above is the benchmark most Banks require to issue a Personal Loan. Check your CIBIL Score before submitting your Application for a Personal Loan to know your status. An oversight on repayment or an error in your CIBIL report can also lead to a downgrading of your score.
If your score is below the required benchmark or there are aberrations in the history, the lender will be apprehensive about granting your loan request. Further, every time you apply and an enquiry is sent to CIBIL, your score gets deducted by 10 to 15 points, leading to further damage.
If you are a first-time borrower and do not have a CIBIL rating, apply for a Personal loan from a lender that processes requests from applicants with no credit history, such as HDFC Bank and ICICI Bank.
You can apply for the loan amount required, but the bank will issue the amount you are eligible for per the bank’s criteria. Each lender has their own standards, though they broadly remain similar for most lenders.
High-income applicants and individuals working in the Category A or B listed companies of the banks are given loan amounts applied for if their credit score is healthy. In contrast, if you work for a non-listed company and do not have a CIBIL history, banks may be apprehensive about giving you the loan amount you need.
Apply to a Bank with which you have a previous relationship, such as a salary account, or start by initiating a credit score by applying for a lesser amount.
If you need funds and are looking to Apply for a Personal Loan, evaluate your finances before applying. What is the monthly income you receive that is tabulated and credited to your account versus the EMI you pay?
The Banks calculate Eligibility for a Personal Loan considering that the applicant should easily afford the monthly living expenses after paying the EMI and credit dues. The total of the current EMI and 5% of credit card dues should not exceed the income ratio reserved for mandatory expenses.
If the EMI running over the income before applying for a further amount, you can do the following to enhance your eligibility and create room to pay an extra EMI:
Take action before applying for the loan otherwise, the request can be denied because the applicant is declared as overleveraged.
A Personal Loan, being unsecured in nature, is processed based on designated documents. The documents you submit to process your personal loan request represent your professional and personal profile.
Three months’ Bank statement of your salary account that depicts your financial health. Your Bank statement must reflect the following;
The salary slips for the last three months must reflect:
KYC Documents Include:
Your PAN card, Aadhaar card or an alternate approved identification and address proof. These documents are mandatory and must be readily available when submitting an application.
Points to note when submitting documents are:
Additional Documents required per the policy of the individual Bank include:
A one time submission of documents that have verified and self-attested by the applicant are the manta to receiving funds on time.
Consider the features of various Banks, which is the Bank offering you the most suitable terms.
Applying to numerous lenders simultaneously is not a favourable option as, besides hurting your CIBIL, it will make lenders wary about your intentions to take a loan from multiple Banks, which might not be easy to repay.
The foremost criterion for most customers when Applying for a Personal Loan is the lowest Interest rate. Though the cost of the loan is a priority, other features that can influence your choice of lender are as follows:
Gaining knowledge beforehand and gathering information to make an informed decision is always beneficial calculate your EMI using our EMI Calculator to check which tenure suits you financially.
If you reside in the Delhi and NCR region, NOIDA, or Gurugram, contact us at www.yourloanadvisors.com to book a personalised visit from our advisor to help you apply to the lender with the desired terms.
Deciding to review the terms available may consume time and effort, but doing this exercise before Applying for a Personal Loan makes the journey satisfactory!
Let’s face it: life is unpredictable, and unexpected financial emergencies can catch anyone off guard. Whether it’s about a medical emergency, sudden job loss, or urgent car repair, having quick funds can make all the difference. Want urgent funds when dealing with a financial crisis but don’t know where to start? Well, getting a Personal Loan can be a great place to start. It can be an invaluable tool to bridge the gap and prove a lifeline in times of financial crisis. Are they scrambling with a financial crisis? Here are some ways to deal with it and build resilience for the future!
The initial step of managing a financial crisis is assessing your financial situation. To begin with, you need to create a detailed budget to understand your income, outline the field expenses and identify discretionary spending. Besides, consult a professional or take some time to differentiate between essential and non-essential expenses so you can cut back temporarily, prioritise bills and focus on necessities like utilities, housing, groceries, etc. Getting a clear idea of your essential expenses can help you make informed decisions about where to allocate limited resources without any potential pitfalls.
Ideally, everyone should have an emergency fund to cover three to six months of living expenses. However, many people find it challenging to save consistently. If you haven’t established an emergency fund, start setting aside a portion of your income as soon as possible. In times of crisis, having savings can provide a financial buffer, and if you don’t have an emergency fund, focus on saving a small amount regularly until you reach a comfortable cushion. In addition, consider automating savings to make the process more disciplined and less prone to ignorance.
When going through a financial crisis, don’t rely on a single source of income. Instead, explore additional income streams and look for part-time or temporary employment opportunities, freelance work, or gig economy jobs that align with your skills and schedule. You can also use online platforms to market your skills or services. Besides, consider selling unused items or exploring the sharing economy for potential income. Generating extra income doesn’t just strengthen your finances it also provides a sense of empowerment and control over your situation.
For one, if we go by definition, a Personal Loan is an unsecured loan offered by financial institutions, such as NBFCs and banks. They differ from conventional, secured loans because secure loans require collateral, whereas Personal Loans are granted based on your creditworthiness and paying ability. You can apply for an Instant Loan Online, and they are suitable for a wide range of financial needs, including emergency medical expenses, consolidating high-interest debts, urgent home repairs, etc.
Let’s consider a situation. An individual gets a monthly salary or income from a business and saves it anytime. Typically, a person uses the monthly payment to meet their daily expenses, such as food, conveyance, or other usual expenses like household chores, utility bills, tuition, etc. Any savings or surplus is saved for a specified objective, and the money someone saves for the long term is goal-based.
Whether discussing retirement, building a home, buying a car, or starting a business, savings aren’t meant to be spent on a rainy day. However, most people use their saved money for emergencies, which sets them years back regarding their financial objectives. Instead, they can always Apply for an Instant Personal Loan and get the same amount for a minimal interest rate. They can use it for emergencies and other short- and long-term goals.
Financial crises can be emotionally draining, and they don’t come knocking at your door. There’s no denying that Instant Personal Loans provide a flexible and accessible way to tide over financial hurdles. However, you can always stay prepared to avoid any unexpected crisis. Need more information or want to find the best lenders who can help you with the loan at reasonable interest rates? Feel free to contact the professionals at Your Loan Advisor today!
Why does my CIBIL Score remain constant? I am paying my Credit Card Bill duly and have never taken excess credit I have repaid my loans successfully, yet whenever I check, my score hovers around the 720 points mark. How can I increase my CIBIL Score?
This is a familiar scenario for many who feel they are doing everything right yet not being rewarded, with their rating showing an upward trend.
To understand the CIBIL Score trend, we first need to examine how the CIBIL Score is calculated, what algorithms are used and how they affect your current rating. Let us study the significant inputs:
The Previous Credit History: Your record from the first time you got a Credit Card or applied for a consumer loan will reflect in your data. The repayment track of all the Personal Loans or Home Loan EMI paid, timely or with delays, is all mentioned in the history.
Your payment history forms the basis of your CIBIL Score points contributing towards a successful history include an extended length of credit track, the number of credit lines you have used, and an on-time payment record.
All the credit used should be repaid and closed successfully any credit cards or personal loans settled will be reflected in your CIBIL and bring down your score.
Credit Type and Duration: Type of credit means secure loans like home loans, Auto loans, Loans Against Property and consumer loans, where funds have been given against a mortgage and unsecured loans such as credit cards and Personal Loans, which are collateral-free.
A good mix of credit is one in which the individual uses a judicious mix of secure and unsecured credit.
A credit card with a good vintage, which is in regular usage or a personal loan that has been repaid over the allotted tenure is proof of the customer’s responsibility towards repayment of credit taken and builds lender confidence; a home loan with a longer repayment tenure indicates the capacity of the borrower to sustain long-term payments and consolidate assets. The type of credit used and duration comprise 25% of your credit score.
Credit Exposure: What is the quantum of credit which you have availed? Has the ratio of credit used increased with the increase in income over time? Your credit exposure is evaluated according to the percentage of credit you use compared to your income. This section contributes to another 25% of your credit rating.
Ideally, you can allot 50% of your income towards credit repayment per the eligibility criteria and the balance for lifestyle expenses or building assets. Banks allow this ratio to increase as your income increases depending on the EMI Calculation.
For example, suppose you have used credit conservatively with a home loan and a credit card, which is used rarely. In that case, you will have a mediocre CIBIL rating, which can also limit the chances of getting enhanced loan amounts if required in an emergency. Lenders need proof and be assured that you can meet the challenges of handling your credit and making timely payments.
You can uplift your score by working on your current credit exposure: activate any dormant Credit Cards by using them for regular spending, like filling fuel in your vehicle, eating in restaurants, spending on travel expenses by paying hotel bills and air or rail tickets and paying your bills as per the payment cycle due date.
Go in for a consumer loan rather than paying cash when purchasing household items; many stores offer further discounts on credit or debit card payments. Ask for an increase in your credit card’s spending limit. Using unsecured credit like a Personal Loan will help increase your CIBIL rating quickly.
Your credit exposure over time and current usage influence 25% of your score calculation.
Besides the more significant inputs considered, other influencing factors include the following:
CIBIL Errors: The Credit Bureau of India Ltd (CIBIL) is a non-government credit rating agency aggregating consumer borrowing and payment information. The Reserve Bank of India has authorised it to collect data from financial agencies, grade the same, and allot ratings based on borrowings and repayment information.
Consumer data is tabulated according to personal details, including name, PAN numbers, mobile numbers, employment details, residence address, and bank account details: a unique control number is further allotted to the customer. Although the information is verified, and the chances of an error are minimal, they could happen.
It is our first-hand experience that CIBIL mistakes happen, and when a customer is informed about being denied a Personal Loan request due to an aberration in the CIBIL, it comes as a surprise.
On closer investigation of the CIBIL record, it is found that a wrong entry has been recorded. There are chances of a wrong admission on behalf of the financer, and if the applicant’s details are wrongly entered, the CIBIL can update the incorrect information.
A CIBIL entry showing credit not used by the customer or a mistake in the repayment track can be rectified by raising a dispute with CIBIL as follows:
Ask for your CIBIL details and study the data entered. Are there any omissions or errors which are affecting your rating? Rectification of the same will help increase your score.
Pending Credit Lines: After the complete repayment of a loan or the closure of a credit card, it is advisable to procure a closure letter from the lender to substantiate the transaction. Any pending dues will be updated in the CIBIL an individual may be unaware of these dues, which, left unpaid, can multiply and downgrade the CIBIL Score.
Checking your CIBIL Score every six months will keep you updated on any transactions you might have missed and alert you to any dues. If there are any dues, clear the same and inform the lender to rectify the same. Settling any balance payments could boost your CIBIL to the required score if you need to Apply for an Instant Personal Loan.
In conclusion, Leading Banks like HDFC Bank and ICICI Bank require a minimum of 730 points as a CIBIL Score to issue further credit. If your score is lagging, take note of the pointers listed above to help you decipher the reason and take action as recommended.
With extensive credit usage as a norm, consumers know the importance of maintaining healthy credit and make it a point to keep their scores on track. Regularly checking, maintaining active use and timely repayment are ways to achieve an optimal score.
In today’s economy, a cash crunch has become a common dilemma for salaried individuals with a limited income. There are times when you find your earnings insufficient to meet urgent requirements and during these times, securing a Personal Loan can be an excellent way to handle your financial situation and save the day. Personal loans are known for their agility and versatility, as borrowers can use them for various purposes, such as home renovation, medical emergencies, a wedding in the family, or even their child’s education.
However, is Securing a Personal Loan Easy? The Good News is: YES, IT IS!
Besides, there are numerous advantages of personal loans. They are better than conventional borrowing options because of their fixed interest fees and long repayment tenure, and people love how quickly they are approved. Want to apply for an Instant Personal Loan but don’t know where to begin? Well, here’s a simplified guide to help you get started!
When most people apply for personal loans online, they do so without thinking about their eligibility. Typically, lenders consider factors such as income, age, credit score, and the borrower’s employment status. So, depending on where you are borrowing, check the eligibility criteria for your concerned bank and compare different financial institutions to ensure you meet the requirements of that bank and are Eligible for Personal Loan.
Once you have established your eligibility for the loan, the next step is to decide the loan amount and tenure. Based on your financial needs and how much the bank can lend you, realistically choose an amount that covers your expenses without burdening your repayment capacity. In addition, consider the loan tenure carefully because shorter tenures mean higher EMIs but lower overall interest payments. Longer tenures mean lower EMIs but higher interest costs.
You must clearly understand your eligibility and preferred loan terms and compare different lenders and interest rates. A thoughtful comparative analysis can help you get a sneak peek into the different interest rates and terms, significantly influencing the loan’s overall cost. If this step seems too complicated for you, you can always contact the professionals for loan financial insights.
After you find the lender or the financial institution offering you a loan, you must prepare all the necessary documents for the personal loan application. Typical documents include address proof, identity proof, income proof, and employment details. Before you submit the applications with the attached documents, ensure that all records are up-to-date, accurate, and filed promptly without any setbacks.
Gone are the days when you had to visit five branches of five different banks to secure a loan. The digital era has ushered in, and many lenders in India are offering the convenience of instant personal loans online. You can go to their website, complete the application process, and provide accurate information. Then, your application will be cross-verified along with your documents and creditworthiness, and you can get your loan with a relatively shorter processing time.
While a considerable portion of our population meets their financial commitments using their earnings, sometimes income isn’t enough to accommodate extraordinary expenses. That’s when low-interest personal loans come to the rescue. You can avail of a personal loan from different. Banks, and if you are still confused about the benefits, process, or source, don’t hesitate to contact Yourloanadvisors. The professionals have in-depth experience steering people toward making the right loan decisions, and personal loans are no exception!
Imagine yourself at a crossroads where your needs and desires meet, with many chances to come. While you have many dreams, you may be putting off your goals due to financial concerns.
The YES Bank Personal Loans are a beacon of hope during these uncertain times, helping you make your dreams come true. The YES Bank is aware of life’s unpredictability, and its Personal Loans are dedicated to supporting you in realising your goals via its simple application procedures and flexible repayment schedules.
Transform your aspirations into genuine accomplishments by taking a bold step into the world of possibilities with YES Bank Personal Loans.
Introducing Sarah, a big-dreamer who is ready to fulfil her dreams. Sarah finds three unique personal loan programmes at Yes Bank, each intended to coincide with significant life events.
These Personal Loan programmes are tailored to meet Sarah’s specific needs and fully provide her with the money she needs to enjoy and commemorate these important occasions. The YES Bank helps Sarah achieve her goals by providing tailored solutions.
Like Sarah, do you have lofty goals and want to learn more about Applying for a YES Bank loan? If yes, let’s get into the details right now.
Understanding the requirements is crucial before submitting an Application for a personal loan. With YES BANK, determining your eligibility takes just 60 seconds!
Log in and enter information about yourself, such as your age, monthly income, employment history, recurrent costs (such as current mortgages or rent), and number of years you are living at your present address (whether it’s owned, leased, or mortgaged).
You may proceed confidently after completing this easy step since you will be well informed. Verify your financial stability by understanding and meeting the requirements for a Personal Loan from Yes Bank.
Do you have questions about Applying for a Personal Loan at Yes Bank? Do these simple steps at the nearest Yes Bank facility or online:
Look at your salary and credit history for an accurate estimate and swiftly determine how much you can borrow. This online tool gives you the accuracy to make informed financial choices.
Use the personal loans offered by Yes Bank to unlock a world of ease.
The YES Bank Personal Loans provide a smooth and powerful financial experience customised particularly for you, exceeding your expectations.
Therefore, a YES Bank Personal Loan makes Sarah’s path to happiness possible. By giving Sarah the necessary funds, YES Bank enables her to accept and cherish essential occasions. Her dreams are within reach with YES Bank’s simple application process and hassle-free eligibility checks.
If you have any inquiries or worries about a Yes Bank Personal Loan, don’t hesitate to contact the approachable team at Your Loan Advisors. They are ready to assist you and offer the support required to reach your financial goals. Contact them today and allow them to steer you towards a more promising financial future.
Getting a Personal Loan has become a prerequisite to fulfilling an individual financial need: Banks and NBFCs offer attractive terms to gain customers that best meet their eligibility criteria.
Gone are the days when getting funds was a long and drawn-out affair Digitalisation has hastened processes, and financers now have the experience and devised methods to eliminate unnecessary delays.
To get funds in time, there is much that an applicant can ensure before submitting an application. A well-planned and researched application with a know-how of the Bank’s criteria will help make the journey successful.
An applicant should be aware before Applying for a Personal Loan if the lenders’ terms are suitable. Below is a checklist that an applicant can take note of to receive funds as desired via a Personal Loan.
The primary check is to confirm if your employer features in the approved list of companies for sourcing a Personal Loan.
Your Personal Loan Application is prioritised according to the category of the employer in the Company Category List of the Bank. Individuals working with top companies have a stable income to honour their timely repayment of all credit. They can easily get approval with an enhanced loan amount and suitable terms.
Your company could be listed in Category A of one lender, whereas another Bank may classify your employer as Category C. However, if the employer is not listed, the response to the application may not be favourable.
Some lenders, like the ICICI Bank, also provide loans to employees of Non-Listed Companies. Checking if your company is included in the company category list is necessary to ensure that the Bank processes your loan application.
The CIBIL (Credit Bureau of India Ltd) assimilates all credit transactions reported by Banks and Financial institutions and issues a rating per the credit behaviour of an individual. Funds granted as Personal Loans are without any security financiers refer to the CIBIL to give loans to customers who manage their credit well and repay their EMI on time.
A score of 720 points and above is the benchmark most Banks require to issue a Personal Loan. Check Your CIBIL Score before submitting your Application for a Personal Loan to know your status. An oversight on repayment or an error in your CIBIL report can also lead to a downgrading of your score.
If your score is below the required benchmark or there are aberrations in the history, the lender will be apprehensive about granting your loan request. Further, every time you apply and an enquiry is sent to CIBIL, your score gets deducted by 10 to 15 points, leading to further damage.
If you are a first-time borrower and do not have a CIBIL rating, Apply for a Personal Loan from a lender that processes requests from applicants with no credit history, such as HDFC Bank and ICICI Bank.
You can apply for the loan amount required, but the bank will issue the amount you are eligible for per the bank’s criteria. Each lender has their own standards, though they broadly remain similar for most lenders.
High-income applicants and individuals working in the Category A or B listed companies of the banks are given loan amounts applied for if their credit score is healthy. In contrast, if you work for a non-listed company and do not have a CIBIL history, banks may be apprehensive about giving you the loan amount you need.
Apply to a Bank with which you have a previous relationship, such as a salary account, or start by initiating a credit score by applying for a lesser amount.
If you need funds and are looking to Apply for a Personal Loan, evaluate your finances before applying. What is the monthly income you receive that is tabulated and credited to your account versus the EMI you pay?
The Banks calculate Eligibility for a Personal Loan considering that the applicant should easily afford the monthly living expenses after paying the EMI and credit dues. The total of the current EMI and 5% of credit card dues should not exceed the income ratio reserved for mandatory expenses.
If the EMI running over the income before applying for a further amount, you can do the following to enhance your eligibility and create room to pay an extra EMI:
Take action before applying for the loan otherwise, the request can be denied because the applicant is declared as overleveraged.
A Personal Loan, being unsecured in nature, is processed based on designated documents. The documents you submit to process your Personal Loan request represent your professional and personal profile.
Income Documents Include:
Three months’ Bank statement of your salary account that depicts your financial health. Your Bank statement must reflect the following;
The salary slips for the last three months must reflect:
KYC Documents Include:
Your PAN Card, Aadhaar card or an alternate approved identification and address proof. These documents are mandatory and must be readily available when submitting an application.
A one time submission of documents that have verified and self-attested by the applicant are the manta to receiving funds on time.
Consider the features of various Banks, which is the Bank offering you the most suitable terms.
Applying to numerous lenders simultaneously is not a favourable option as, besides hurting your CIBIL, it will make lenders wary about your intentions to take a loan from multiple Banks, which might not be easy to repay.
The foremost criterion for most customers when Applying for a Personal Loan is the lowest Interest rate. Though the cost of the loan is a priority, other features that can influence your choice of lender are as follows:
Gaining knowledge beforehand and gathering information to make an informed decision is always beneficial calculate your EMI using our EMI Calculator to check which tenure suits you financially.
If you reside in the Delhi NCR region, NOIDA, or Gurugram, contact us at www.yourloanadvisors.com to book a personalised visit from our advisor to help you apply to the lender with the desired terms.
Deciding to review the terms available may consume time and effort, but doing this exercise before Applying For a Personal Loan makes the journey satisfactory!
Molina Singh, an executive with a multi-national company, had just gotten a promotion with a raise in her salary. Feeling elated, she thought this was an occasion to celebrate and invited her colleagues to an exclusive restaurant for dinner. She was so excited with the news that she did not realise that she had already exhausted her budget for the month and decided to fund her celebrations with her credit card.
There were additional expenses, such as buying a new wardrobe, which was also paid with a credit card, before realising she had exhausted her limit, but that did not bother her as she would be earning more shortly. Molina was also paying the instalment for a home loan, so she decided to pay only the minimum due on her credit card bill.
The expected increment was delayed due to policy changes within the company, so Molina needed more funds and decided to take a Personal Loan to cover expenses. Unable to clear the credit card bills in the next few months, Molina found that her dues were now mounting with the credit she had taken and was just able to cover expenses.
The above is a characteristic example of how one can unwillingly find oneself with more credit than one is comfortable handling. This leads to a debt cycle in which the interest keeps mounting, and an individual finds it difficult to pay the obligated EMI or Credit Card dues—resulting in delays and default.
A salaried individual with a fixed monthly income must plan expenses, prioritising mandatory living expenses and then repaying credit dues. If the budget goes out of hand, credit repayment takes a secondary spot, and one is bound to miss out on paying an Emi for a mortgage, an unsecured loan, or a credit card bill on the due date.
The first step towards debt consolidation is to take stock of the existing debts, recognise a problem and actively take steps to resolve it. Take comprehensive steps as there are no shortcuts to doing things correctly. With patience, planning and a consistent approach, there is a way out of a debt cycle.
Note all your current credit obligations, interest rates and the total EMI being paid. The primary outstanding debt to clear is the dues of all credit cards due to the high-interest rate chargeable.
A credit-free period of a month to 40 days is allowed by issuers to pay credit card spending; at the end of the cycle, a statement of the spending and the payment due date is generated.
The customer must ensure that the principal receives the payment on or before the due date, with a choice to pay the minimum due and transfer the balance to the next cycle. The following are the repercussions if the payment is not made timely:
Once the CIBIL Score is affected, it can affect the client’s prospects of acquiring further credit quickly: mishandling unsecured credit like a Personal Loan or a credit card is more of an issue. It directly affects the credit score and the heavy penalties. To avoid further damage, the following are the options:
Looking for an easy way out is never a good choice, as it may seem. Although it is a temporary relief, it can magnify the problem further and hamper prospects of receiving credit in the future.
Once the credit card debt is under control, check your current loans and their status. The unsecured Personal Loan EMI is presented to the salary account on a fixed date, most likely to be the month’s 1st,7th or 10th. The customer must ensure enough funds are in the account to clear the instalment. If the EMI is returned unpaid, the following happens:
If there are insufficient funds in the account and the EMI is returned or bounces, the customer will get an alert for the same. If there is a slip and the EMI date has lapsed due to an emergency or forgotten because of other pressures, the customer must make amends immediately and pay the amount.
If you feel burdened with the EMI or defaulting on payments, take stock of all your existing Loans and what is the total EMI you are paying.
Primarily, tackle the Unsecure loan like a Personal Loan or a loan against a credit card, as a delay in payment will directly affect the CIBIL Score. However, the solution will depend on the type of loan you are operating and the terms of the Loan.
Banks issue small ticket loans based on an active credit card being used by account holders; the loan amount offered will depend on the limit of the card and the balance available in the account. A loan borrowed based on an existing card must be repaid promptly, as delays can quickly inflate the penalties.
The instalment for the loan is presented with the Credit Card Statement as a part of the bill that needs to be paid on the due date.
A Loan amount taken on behalf of a Credit Card can easily mount debts a customer paying minimum due is unaware that the original amount remains unpaid and plays a vital role in leading to a debt cycle.
Banks such as Axis Finance Limited allow the transfer of a Credit card debt to a Personal Loan, which can be conveniently repaid in equated instalments at half the interest.
A Personal Loan is funding received for personal usage and emergency needs from Banks and NBFCs such as HDFC Bank and NBFCs like Tata Capital. A Personal Loan is a short-term Loan with a Tenure extending from 12 to 60 months, disbursed within 72 hours. Therefore, an applicant is tempted to apply for multiple Personal loans.
In the event of financial pressures or delays and defaults in payment of the instalment and the budget seems unaffordable, the following can help to get you back on track:
Credit is freely available as a secure loan for lifestyle needs salaried persons and entrepreneurs fulfil their ambitions and dreams of owning a home, driving their own vehicle or starting a new venture.
Loans such as Auto loans, gold loans or a mortgage are secured loans in which the bank has a lien to the property given as a security. The security safeguards the lender’s interest, and the loan is commissioned based on the security deposited.
Banks and NBFCs market secure loans at attractive terms and interest rates they expect the customer to be responsible for repayment and enjoy the facilities offered. Therefore, the customer’s prerogative is to ensure sufficient funds are in the account to support the EMI.
Putting the security given to the Bank at risk is a situation to avoid at all costs. Though a financial crunch can put payments behind and create a debt cycle, rectifying the situation as soon as possible is essential. The following can help in the consolidation and relieving of your debt.
As far as possible, be sure you can afford the payback before accepting credit and make credit obligations an essential part of the monthly budget. If an untoward circumstance does happen, do not sweep the problem under the carpet. It will only aggravate and lead to further debts.
There is no tailor-made solution for Debt Consolidation, and it has to be handled according to the customer’s situation and the debt’s nature. If the financial crunch is short-term, it is best to clear all dues once sufficient finances are in hand. If finances are constricted, working out a comprehensive plan will slowly but surely lead you to financial stability.
Personal Loans offer a unique financial solution by providing unsecured access to funds without the need to pledge any collateral, such as property, vehicles, or insurance policies. These loans include covering wedding expenses, financing higher education abroad, home renovation, business expansion, international travel, medical emergencies and even consolidating high-interest debts.
As unsecured loans, Personal Loans typically come with higher interest rates than secured loans. The interest you’ll be charged depends on your income, employment history, existing debt commitments, credit score, credit history, and relationship with the lender. Interest rates can vary from 8% to 16% and may even reach 21% to 24% annually. To find the perfect Personal Loan tailored to your lifestyle and repayment capacity, using a Personal Loan EMI Calculator is highly recommended.
The Personal Loan EMI Calculator is a valuable, cost-free tool that allows you to compute the interest expenses associated with a specific loan. This calculator assists you in gauging both your loan eligibility and the monthly budget required for loan repayments. It shows the applicable interest rates for varying loan tenures based on your principal loan amount. Operating a Personal Loan EMI calculator involves entering critical details like your desired loan amount, the prevailing interest rate, and preferred loan tenure. You can also experiment with different interest rates within the specified range to observe how they impact your EMI
Obtaining a Personal Loan can be a significant financial decision, and it’s essential to approach it with careful consideration and planning. One of the invaluable tools at your disposal when contemplating a Personal Loan is the EMI (Equated Monthly Installment) calculator. The importance of utilising an EMI calculator before obtaining a Personal Loan cannot be overstated, and here’s why:
Financial Clarity
EMI Calculators offer clarity on the financial commitment you are about to make. You can instantly compute the exact EMI you must pay each month by entering the loan amount, interest rate, and tenure. This information is critical for budgeting and ensures you won’t be caught off guard by unexpected repayment amounts.
Loan Assessment
Before Applying for a Personal Loan, it’s crucial to understand your loan eligibility. EMI Calculators help you assess how much loan you can comfortably afford. By adjusting the loan amount, tenure, and interest rate, you can determine the most suitable loan terms that align with your financial capacity.
Comparison Shopping
EMI Calculators are invaluable for comparing different loan options. You can assess the impact of interest rates and tenures on your EMIs, allowing you to make informed decisions about which lender and loan product best suits your needs.
Planning for the Future
Using an EMI Calculator allows you to plan for your financial future. You can predict how the loan will affect your monthly budget and make necessary adjustments. This is especially important when you consider that Personal Loans often have varying interest rates, and a slight change in the interest rate can significantly affect your monthly EMI.
Avoiding Overcommitment
Personal Loans are often taken for various purposes, such as education, medical expenses, or a dream vacation. It’s easy to get carried away with the loan amount. An EMI calculator helps you strike a balance between your aspirations and your financial capability. It ensures that you don’t overcommit to a loan that may strain your finances.
Interest Savings
Using an EMI Calculator, you can also assess the long-term cost of your loan. It helps you see the total interest you’ll pay over the loan tenure. This knowledge can motivate you to find ways to save on interest by making prepayments or choosing a loan with better terms.
Using an EMI Calculator before obtaining a Personal Loan cannot be understated. It’s a tool that provides transparency and clarity and empowers borrowers to make well-informed financial decisions. It ensures that you enter into a loan agreement with a clear understanding of your obligations and the confidence that you can manage them effectively.
An EMI (Equated Monthly Installment) Calculator is a handy financial tool that simplifies calculating the monthly repayments for a loan whether you’re planning to take out a home loan, personal loan, or any other installment-based credit, understanding how an EMI Calculator works is crucial.
Input Parameters
The calculator requires specific input parameters to compute the EMI. These typically include:
Loan Amount: The total amount of the loan you wish to borrow.
Annual Interest Rate: The interest rate offered by the lender every year.
Loan Tenure: The period you intend to repay the loan, usually in months.
Interest Calculation: The calculator uses the provided interest rate to determine the monthly interest component of the EMI. This is done by dividing the annual interest rate by 12 to get the monthly interest rate (as there are 12 months in a year). The interest is calculated on the outstanding loan amount each month.
The EMI is computed using the formula:
EMI = [P x R x (1+R) ^N] / [(1+R) ^N-1]
Where:
EMI = Equated Monthly Installment
P = Principal Loan Amount
R = Monthly Interest Rate
N = Loan Tenure in months
Displaying Results
Once you input the loan amount, interest rate, and tenure, the EMI Calculator instantly computes and displays the monthly EMI amount. It also summarises the total interest payable over the loan’s duration.
Amortisation Schedule
Some advanced EMI Calculators also generate an amortisation schedule. This schedule provides a month-by-month breakdown of your EMI payments, showing how much goes toward the principal loan amount and how much covers the interest. It helps you understand how your loan gets paid off over time.
Option for Customization
Many EMI Calculators offer the flexibility to input different interest rates, loan amounts, and tenures for comparison. This allows borrowers to experiment with various scenarios to find the most suitable loan terms.
Prepayment Analysis
Some calculators also incorporate a prepayment feature. You can input additional payments or lump-sum prepayments to assess how they affect the loan’s tenure and overall interest cost.
EMI Calculators are potent tools that automate complex financial calculations, providing borrowers a clear understanding of their monthly financial obligations. They allow borrowers to make informed decisions about loan amounts, tenures, and interest rates, ensuring the loan fits their budget and financial goals. By offering transparency and the ability to experiment with different scenarios, EMI Calculators empower individuals to take control of their financial decisions and plan for a secure financial future.
Many lenders provide a user-friendly Personal Loan EMI calculator tool on their websites, which is incredibly convenient. Interestingly, these calculators can also be handy personal loan interest calculators on your mobile device since they are compatible with most smartphones. All you need to do is enter basic loan details and receive instant results. These tools don’t necessitate any personal information for calculations, and you can use them for as many scenarios as you like, free of charge. Additionally, EMI calculator tools often include links to streamline the online application process. This lets you make well-informed loan decisions and quickly secure a personal loan.
One of the primary advantages of the Personal Loan EMI (PL EMI) Calculator is its time-saving convenience. This online tool ensures that you don’t have to physically visit a bank, endure long queues, or wait for your loan EMI to be manually calculated. The process is simplified, and the need for extensive document submissions or agent interactions for determining loan amounts and interest rates is eliminated. What’s particularly convenient is that the PL EMI calculator is accessible online, allowing you to use it on the go, whether on a short work break or vacationing in a remote part of the world. All that’s required is a stable and secure internet connection.”
The EMI Calculator’s user-friendly interface simplifies the process, allowing borrowers to steer clear of intricate calculations. You swiftly obtain your repayment amount with the simple input of the desired loan amount, personal loan interest rate, and loan tenure. This eradicates the need for the arduous task of conducting manual calculations using the EMI Formula. It’s important to recognise that employing the formula or even relying on Microsoft Excel for EMI Calculations introduces an added layer of complexity. This involves adjusting values to match formula parameters, which can raise the potential for errors. This underscores one of the most significant advantages of the Personal Loan EMI Calculator its capacity to deliver reliable and accurate results. The EMI Calculator provides precise total repayment amounts for various personal loan scenarios within seconds.
An EMI Calculator goes beyond mere EMI Calculations it provides a valuable window into your repayment strategy. It creates an amortisation table for your loan tenure, laying out the intricacies of your repayment structure. Within this table, you’ll find a precise breakdown of each EMI’s principal and interest components, offering a comprehensive view of their respective contributions to your repayment journey. This level of accuracy is particularly advantageous when considering prepayments, allowing you to pinpoint the optimal moments to leverage such payments for maximum interest savings.
The simplicity of EMI Calculators empowers you to explore and compare different loan offers and terms effortlessly. With this tool, you can meticulously review repayment details for various loan durations, allowing you to pinpoint options that align with your financial capabilities. The same approach can be applied when evaluating various loan proposals. Suppose you’re aware of the interest rate you’ve been offered. In that case, you only need to assess the EMI and interest expenses, making it easy to filter and shortlist options based on your affordability. Once you’ve completed this step and identified the ideal personal loan offer, you can confidently proceed with your application, knowing you’ve selected a financial tool that serves your best interests.
Over recent years, Personal Loans have gained significant popularity due to their collateral-free nature and versatility in usage. Despite their slightly higher interest rates than loans secured by assets like property, many borrowers opt for Personal Loans, appreciating their lack of collateral and effectiveness during emergencies and financial constraints. Today, utilising a Personal Loan EMI calculator has become the preferred choice for borrowers over traditional offline calculations. While a Personal Loan can provide financial flexibility, it’s crucial to consider factors such as loan amount, repayment capacity, interest rates, loan tenure, and more before deciding. A Personal Loan EMI calculator is essential to ensure precision and clarity when Applying for a Personal Loan.
Personal Loans serve various purposes, including Debt Consolidation, home improvements and managing unforeseen expenses. A Personal Loan is unsecured, meaning it doesn’t require the provision of collateral like a house or car. Instead, eligibility is determined based on your creditworthiness and ability to repay based on specific documents.
The documents are the basis for sanctioning a Personal Loan, and the loan terms, including the amount, Interest Rate, and Tenure or Repayment period, depending on your profile, credit score, and income.
To initiate a Personal Loan process, the complete list of documents as required by the lender must be submitted. Though the documents needed for a Personal Loan are standard across most Banks such as ICICI Bank and HDFC Bank they can vary and additional documents can be requested depending on the policy of the individual financer.
As a salaried employee, you must provide specific documents to support your application when Applying for a Personal Loan. These documents serve different purposes, and here’s an elaboration on the role of each document in the application process:
This is a mandatory document for identity verification and financial transactions.
A valid passport serves as a universally accepted proof of identity.
It serves as a government-issued photo identity proof.
This is an official document that verifies your identity for voting purposes.
The Aadhar Card is a unique identification document issued by the Indian government.
Identity Proof Check.
A photo identity proof gives a representation of the applicant’s persona. Checklist for documents includes the following:
This document can serve as both identity and residence proof.
A recent utility bill in your name and address confirms your residential address.
A valid passport can also be used as residence proof.
It is an official document indicating your residential address.
It can also be used as residence proof.
Rent Agreement
Between the landlord and the applicant is an acceptable residence proof.
A copy of the landlord’s electricity bill is required to prove ownership.
Residence Proof Requirements.
The salary slips provide current income details.
This shows your regular salary credits, confirming your income stability.
Form 16 is a vital income document for salaried individuals, which proves employment continuity and Tax deductions.
This verifies your current employment status.
This serves to demonstrate your work history.
Income Proof
For Salaried applicants, the salary slip is the mandatory requirement for a Personal Loan and should reflect the following:
Bank Statement
The customer’s Bank statement confirms the financial status and dealings when Applying for a Personal Loan. The Bank statement for the last three months must include the following:
A recent passport-sized photo is required for identification and documentation.
Having these documents in order and readily available can streamline the Personal Loan Application process, making it more efficient for salaried individuals. Specific requirements may vary among lenders and Banks such as Axis Bank, so you should check with your chosen financial institution for additional or unique document requirements.
The Significance of Aadhar Card for a Personal Loan
In India, the Aadhar Card has emerged as a fundamental document with many applications in various aspects of life. Its importance is not limited to identity verification for government schemes and subsidies but extends to the financial sector. One significant role of the Aadhar Card is its relevance in the Personal Loan Application Process.
The Aadhar Card, issued by the Unique Identification Authority of India (UIDAI), is a biometric and demographic identification document containing a unique 12-digit number for every Indian resident. This card has gained immense significance in the realm of Personal Loans, and here’s why:
Streamlined Verification
Aadhar Card simplifies the KYC (Know Your Customer) process for lenders. Its unique identification number allows for quick and accurate verification of an individual’s identity, reducing the chances of identity fraud in the Personal Loan Application Process. It also eliminates the need for multiple identity and address proofs, making the process more convenient for applicants and lenders.
Digital Authentication
Aadhar Card offers the advantage of e-KYC, enabling the verification process to be completed electronically. This digital authentication eliminates the need for physical documentation and significantly expedites the loan approval process. Borrowers can provide their Aadhar number and lenders can access the necessary information online.
Paperless Application
Many financial institutions now offer paperless loan applications where the Aadhar Card is a primary document. This reduces the environmental impact and makes the loan application process more efficient. Borrowers can submit their Aadhar number and other required information electronically, saving time and effort.
Wider Accessibility
The Aadhar Card is widely accessible, as nearly every Indian resident is eligible to obtain one. This inclusivity ensures that a broader population can access personal loans, even if they do not possess traditional identity documents. This is particularly beneficial for individuals in rural areas who may not have access to other forms of identification.
Secured Lending
Lenders often consider personal loans against Aadhar-verified Individuals lower risk, given the robust authentication and reduced chances of identity fraud. This may translate into more favourable loan terms, including lower interest rates and loan amounts.
Remote Application
The Aadhar Card’s role in Personal Loans is especially relevant in the context of the ongoing digital transformation. Borrowers can apply for loans from the comfort of their homes, regardless of their geographical location, as long as they have a valid Aadhar Card and an internet connection.
The Aadhar Card is pivotal in streamlining and simplifying the Personal Loan Application. Its digital authentication, paperless applications and secure identification methods have transformed how personal loans are processed in India.
Importance of PAN Card for Personal Loan
A Personal Account Number (PAN) Card, issued by the Income Tax Department of India, is a crucial document that holds immense significance in personal loans. This 10-character alphanumeric identifier, unique to each Indian taxpayer, plays a vital role in applying for and approving personal loans. Here’s why the PAN Card is so important in this context:
Identity Verification
The PAN Card serves as a primary document for identity verification during the Personal Loan Application process. Lenders rely on it to confirm the applicant’s identity, reducing the risk of identity fraud. It offers a standardised and reliable way to establish the borrower’s identity.
Signature Verification
The PAN Card contains the authenticated signature of the applicant thus, it is an essential document required for all financial transactions. The lender will match the signature on the PAN card with the Personal Loan Application form and self-attested documents to ensure that the signatures are genuine.
Financial Stability Assessment
Lenders assess loan applicants’ financial health and stability by examining their income and tax history. The PAN Card is closely linked to an individual’s tax records, including income details, tax payments, and financial transactions. This information provides a comprehensive view of the applicant’s financial situation, helping lenders make informed decisions about loan eligibility and terms.
Adequate Tax Compliance
The PAN Card is directly tied to the payment of income tax in India. To be eligible for a Personal Loan, applicants must demonstrate tax compliance. Lenders often require a PAN Card to ensure borrowers have filed their income tax returns and adhere to their tax obligations.
Limit Adherence
Personal Loans come with various regulatory limits, such as interest rate caps and loan amount restrictions. The PAN Card helps lenders verify whether the loan amount and terms align with these regulatory guidelines. This ensures that borrowers are provided loans within legal and permissible limits.
Reduced Tax Deduction at Source (TDS)
Regarding interest income from fixed deposits or other financial investments, the PAN Card must ensure that TDS (Tax Deduction at Source) is deducted at the correct rate. This ensures that borrowers do not face unexpected tax deductions that could impact their ability to meet loan repayment obligations.
Income Verification
Lenders often rely on the PAN Card to verify the applicant’s stated income against their tax returns. This cross-verification process helps ensure that the applicant’s income is accurately represented and can be used to determine the loan amount eligibility.
Legal Requirement
From a regulatory perspective, many lenders are legally obligated to collect and verify the PAN Card details of loan applicants. This is by Anti-Money Laundering (AML) and Know-Your-Customer (KYC) guidelines imposed by the Reserve Bank of India and other regulatory bodies.
The PAN Card is a cornerstone in India’s Personal Loan Application Process. It is a reliable means of identity verification, financial assessment, and tax compliance verification. The PAN Card ensures transparency and adherence to legal and economic standards for lenders and borrowers. Therefore, when Applying for a Personal Loan, having a valid PAN Card is essential and often mandatory to facilitate a smooth and successful loan application process.
Age
Generally, applicants must be between 23 and 60 years old to be eligible for a personal loan. However, the age range can vary between lenders.
Employment
Lenders typically require applicants to be salaried or self-employed individuals with a steady source of income and a minimum work experience of 2 years.
Income
There is usually a minimum income requirement, which varies among lenders. ICICI Bank entertains applicants with a monthly income of 35k and above. In contrast, YES Bank allows applicants with a salary of 25k to apply. The income threshold ensures that applicants can repay the loan amount.
Credit Score
A good credit score, or CIBIL Score of 750 and above, is typically required for better loan terms. Some lenders may offer loans to individuals with lower credit scores but higher interest rates.
Employment Stability
Lenders may consider the applicant’s employment history. Salaried individuals might need a minimum number of years in their current job, while self-employed individuals might need to demonstrate their business’s stability.
Residential Stability
Lenders may verify the applicant’s residential stability, which can involve living in the same place for a specified period or residing in a self-owned or family-owned residence.
Repayment Capacity
Lenders assess the applicant’s ability to repay the loan based on their income and existing financial obligations.
Credit History
A clean credit history is usually preferred without a record of defaults or late payments.
Loan Amount
The loan amount you’re eligible for depends on your income, credit score, and other factors. Higher income and better credit can lead to more significant loan amounts.
Existing Loans
Lenders consider the applicant’s existing loans, as having too much debt can affect your eligibility for additional loans.
KYC Documents
Applicants must provide proper identification and address proof documents as part of the KYC (Know Your Customer) process.
Employer Category
Some lenders have specific eligibility criteria based on the employer or company an applicant works for. Prominent Banks such as HDFC Bank Publishes a Company Category List of approved companies fulfilling the eligibility criteria for sourcing. Public sector employees and certain reputed private companies may have more favourable terms.
It’s worth mentioning that eligibility criteria may differ from one lender to another. Hence, verifying your chosen lender’s specific prerequisites and confirming your eligibility is recommended before initiating a Personal Loan application.
The applicant needs to complete the application form to apply for an Online Personal Loan or physically provide self-attested documents that are crucial in expediting the approval process. Any discrepancies in the documentation should be rectified to ensure a smooth application experience. Documents provided must be legible to avoid any miscommunication.
Additionally, it’s essential to remember that banks meticulously review the submitted documents. Therefore, having a complete and accurate set of documents can expedite your loan approval, while a single incorrect document could lead to the rejection of your loan application.
A Personal Loan can be valuable when you need quick funds to address expenses like paying off credit card debt, home renovations, or handling unexpected financial challenges. It grants you the financial flexibility necessary during such times. However, before you decide to Apply For a Personal Loan, it’s essential to understand how the Rate of Interest operates and the elements that can impact the interest rate you’ll be offered. This awareness will enable you to make informed decisions and secure the most advantageous loan terms possible.
The Interest Rates For Personal Loans are represented as a percentage of the loan amount (principal).
The rate provided is the Annual Percentage Rate (APR), which denotes the yearly rate applied to your loan. Most Personal Loans employ the monthly periodic rate, derived by dividing the APR by 12. When applied to the principal, this monthly rate determines the additional amount you must repay when borrowing the principal and repaying it gradually.
Several factors influence the interest rate you are offered when Applying For a Personal Loan. These factors include:
Whether your employer is a listed (publicly traded) or non-listed (privately held) company can influence your interest rate. Some lenders may offer favourable terms to individuals employed by listed companies, as they perceive them as having stable and verifiable income sources. Thus, the Company Category List For Personal Loans is considered while offering an interest rate.
Your credit score plays a pivotal role in determining the interest rate you’ll be granted. This score is a numerical portrayal of your creditworthiness, meticulously evaluated based on your credit history. A higher credit score typically results in a lower interest rate, indicating a lower risk of default to the lender.
Your history of repaying loans and credit plays a significant role, often encapsulated in your credit score. So, for a favorable interest rate, the Minimum CIBIL Score For a Personal Loan should be 720 and above.
Your monthly income is vital for loan approval and affects the interest rate. Your income is a crucial factor that lenders consider when assessing your loan repayment capability. A higher monthly income may lead to a lower interest rate since it demonstrates a more substantial capacity to meet loan payments.
Your employment status and stability are essential factors. Lenders prefer borrowers with stable employment histories, such as those with the same employer for an extended period. Consistent employment can enhance your creditworthiness and potentially result in a more favorable interest rate.
Lenders tend to generate greater profits from loans with longer terms as the debt has a longer duration to accumulate interest. Consequently, they often provide more attractive interest rates for loans with extended repayment periods. It’s worth noting that specific lenders may impose prepayment penalties on borrowers who settle their loans ahead of schedule.
The amount you intend to borrow can impact your interest rate. Larger loan amounts may be associated with lower interest rates, representing a high turnover and lower management costs to the lender.
The type of lender you choose can influence your interest rate. Banks, credit unions, online lenders, and peer-to-peer lending platforms may offer different interest rate structures. Some lenders specialize in specific borrower profiles and may offer more competitive rates to those who fit their criteria.
Your DTI ratio is the proportion of your monthly income for paying existing debts. A lower DTI ratio indicates a lower financial burden, which can result in a more favorable interest rate.
This ratio measures your Credit Card balances relative to your credit limits. A lower credit utilization ratio suggests responsible credit usage, which can positively impact your credit score and, in turn, your interest rate.
Your relationship with the lender can influence the interest rate on a personal loan. If you are a loyal customer with a strong banking history, your current bank may offer you a Personal Loan at the most competitive interest rate.
| Bank | Interest Rate | Processing fees |
| HDFC Bank Personal Loan | 10.5% p.a. – 21.00% p.a. | Up to 2.50% |
| ICICI Bank Personal Loan | 10.75% p.a. – 19.00% p.a. | Up to 2.50% |
| Yes Bank Personal Loan | 10.99% p.a. onwards – 20% p.a. | Up to 2% |
| Kotak Mahindra Bank | 10.99% and above | Up to 3% |
| Axis Bank Personal Loan | 10.49% p.a.- 22% p.a. | Upto 2% of the loan amount |
| IndusInd Bank | 10.25% p.a. – 27% p.a. | 3% onwards |
| HSBC Bank | 9.99% p.a. – 16.00% p.a. | Up to 2% |
| IDFC First Bank | 10.49% p.a. onwards | Up to 3.5% |
| State Bank of India | 11% p.a. – 14% p.a. | Up to 1.50% |
| Bank of India | 10.25% onwards | Up to 2% |
| IDBI Bank | 10.50% p.a. – 13.25% p.a. | Up to 1% |
Having a solid credit score is a sign of your creditworthiness. Banks and financial institutions tend to provide the most favorable Interest Rates on Personal Loans to applicants with high credit scores. Therefore, assessing your credit score before seeking a Personal Loan is advisable. If your credit score falls below 720, consider methods to enhance it, as a credit score above 750 increases your likelihood of obtaining a Personal Loan at a lower interest rate.
Failing to make a loan or credit card payment can hurt your credit score. Typically, loan providers consider your payment history when determining Personal Loan Interest Rates. Individuals who have consistently made timely payments on their previous EMIs and credit card bills are more likely to receive lower interest rates.
Financial institutions often introduce short-term promotions with lower interest rates, especially during festive periods. Furthermore, specialized schemes designed for female applicants or salaried individuals can make obtaining a Personal Loan at a reduced interest rate easier.
Before Applying For a Personal Loan with a specific lender, it’s essential to compare the interest rates offered by various lenders. A diligent comparison will empower you to secure a more favorable Interest-Rate Personal Loan.
If you hold an existing bank account with a financial institution or maintain a strong rapport with a loan provider, you can negotiate for a more favorable interest rate. An applicant with a previous relationship with a Bank is a preferred customer and can request a reduced interest rate once the loan is approved.
When you’re considering taking out a Personal Loan, it’s essential to understand how interest rates are calculated. The method used can significantly affect the overall cost of borrowing. Here we’ll delve into two standard methods for computing interest rates on loans the flat interest rate method and the reducing balance interest rate method.
The flat interest rate method, also known as the fixed-rate method, is one of the most straightforward ways to calculate interest on a Personal Loan. Under this method, the interest is calculated based on the entire loan amount (the principal) for the whole of the loan tenure. The interest amount is fixed and does not change throughout the loan term, regardless of how much the principal has been repaid.
The reducing balance interest rate method, also known as the reducing balance method or the declining balance method, is the most commonly used method for Personal Loans. In this approach, the interest is calculated only on the loan’s outstanding balance. As you make payments, the principal decreases, which leads to a reduction in the interest amount in subsequent payments.
The Interest Rate For The Personal Loan remains fixed for the entire tenure.
Lenders impose a one-time processing fee, which can potentially raise the overall cost of your loan. Examining and comparing the processing fees from various lenders is crucial, even if you’re offered a low interest rate.
Even if a bank or financial institution provides Personal Loans with attractive interest rates, confirming whether you meet the lender’s eligibility requirements is imperative. Ensure that your income falls within their defined limits and that you fulfill the specified age criteria.
It’s essential to be aware that some banks may impose a pre-closure fee if you decide to repay the outstanding loan balance before the scheduled loan repayment tenure concludes. Therefore, verifying whether the bank or financial institution you’re applying to enforces pre-closure charges is crucial.
When you’re seeking a Personal Loan for an emergency, it’s essential to consider the loan disbursal time. Many well-established banks and financial institutions are capable of disbursing the loan amount almost instantly.
For a smooth borrowing experience, choosing a lender with a reputation for outstanding customer service is essential. Before you proceed with your loan application, take the time to review the available customer support channels and assess the lender’s responsiveness to your inquiries.
Although the lender may impose a slightly higher interest rate, you could potentially reduce the overall loan cost if the processing fee, default charges, pre-payment fee, Loan Cancellation Charges, Check/EMI bounce charges, Instrument return charges, Stamp Duty Charges, Duplicate statement issuance charges, swap charges, Duplicate Amortization schedule issuance charges, and more are lower. Therefore, it’s essential to compare the various fees levied by the lender before proceeding with your Personal Loan Application.
Even if the bank or financial institution has set a high-interest rate, it’s worth negotiating for a lower one. Lenders often offer discounts to their existing customers and those who have cultivated a strong, positive relationship with them.
You can use the Personal Loan EMI Calculator to determine your loan’s Equated Monthly Installment (EMI). Input the loan amount, Repayment tenure, interest rate and processing fee to compute the monthly EMI amount.
Calculation Method for Personal Loan EMI
The EMI formula is expressed as EMI = [PxRX(1+R)^N]/[(1+R)^N-1], where P stands for the loan amount, R denotes the monthly interest rate, and N signifies the total count of monthly instalments.
Meet Mr. Mehta, a 33-year-old IT engineer seeking a Personal Loan to cover his wedding expenses. He plans to request a loan of Rs. 10 lakh and repay it over 36 months, and he envisions a reducing interest rate of 14%.
To compute the EMI For The Personal Loan, Mr Mehta must visit either a bank or NBFC’s website or opt for a third-party website equipped with an EMI Calculator Tool. Subsequently, he’ll be required to enter specific details: the loan amount (Rs. 10 lakh), the loan tenure (36 months), and the interest rate (14% p.a.).
Once these details are entered, the system will reveal the monthly EMI, which amounts to Rs.34,178. In Mr. Mehta’s situation, the total interest to be paid is Rs.2,30,395, and the total payable sum is Rs.12,30,395.
Also, the Interest Rate For a Personal Loan remains fixed for the entire tenure.
When quick cash is necessary, Personal Loans emerge as a viable choice. However, it’s imperative to gain insight into the dynamics of interest rates and the variables influencing the rate you’re eligible for. Elevating your credit score by exploring diverse lenders’ tactics to enhance your prospects of securing the most advantageous interest rate possible.