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  • What is a Personal Loan?
  • A Personal Loan is an unsecured credit given to meet current financial needs. Individuals needing funds for lifestyle needs or emergencies can apply to lead Banks and NBFCs.

    A Personal Loan is conveniently processed based on documents readily available at hand. Salaried employees and Self-employed persons with a regular income can readily secure funds when required as a Personal Loan.

  • How Does a Personal Loan Work?
  • To get a Personal Loan, a loan seeker needs to apply to a lender leading Personal Loan givers are HDFC Bank, ICICI Bank, Axis Bank, and Kotak Bank.

    After processing, the loan amount approved is transferred one time to the applicant’s bank account. These funds can be used as and when needed without any restrictions.

    The borrower has to repay the loan amount with interest to the lender in equal installments over a fixed term or tenure. As a Personal Loan requires no security to receive funds, lenders seek surety of repayment via verification and documentation.

  • Who Can Apply For a Personal Loan?
  • Any citizen of India above 21 years of age with a regular income of 18000/- and above is eligible to Apply for a Personal Loan. The applicant should have a Bank account to show the consistent income received and valid documents for proof of identity and contact ability.

    Though the essential criteria are similar, Lenders offering Personal Loan can specify their terms and conditions for the segment they are ready to serve.

  • What Can a Personal Loan Be Used For?
  • Funds received as a Personal Loan are meant to realize lifestyle expenses. They can be used for various purposes such as family celebrations, vacation expenses, school fees, and even debt consolidation. Medical emergencies and hospital expenses can also be met with a Personal Loan.

    A valid reason is to be provided when Applying For a Personal Loan if the purpose is deemed invalid, the application can be rejected. The loan amount cannot be used for investments or nefarious activities.

  • What is The Turnaround Time For a Personal Loan?
  • With digitalization, Banks have been speeding up processes. Advertising a” Personal loan in 10 seconds,” which may not work for most applicants, the turnaround time has reduced, particularly for applicants with a pre-approved offer or a salary account.

    The average application process time for a Personal Loan range from 3 to 5 working days this is the turnaround time from applying to receiving funds.

  • Do I Need To Pay Any Fees Upfront To Get a Personal Loan?
  • No charges are to be given upfront when Applying For a Personal Loan, neither in cash nor by a banker’s instrument. Banks and NBFCS charge fees on the approval of the loan amount after processing the application.

    The processing fees charged are from nil up to 2.5% of the loan amount disbursed, depending on the policy. This amount is deducted from the loan amount approved and transferred to the Bank account.

  • What is the Maximum and the Minimum amount given as a Personal Loan?
  • The minimum amount given as a personal is ₹ 50k, and the maximum is ₹ 35 lakhs.

    An applicant is free to apply for the amount needed, but it is the prerogative of the lender to decide on the loan amount to be issued. Banks and NBFCS forwarding personal loans have their matrix to calculate the eligibility for the loan.

    The primary concern is the affordability of the loan and the capacity to repay the monthly installment.

  • Are Any Taxes Payable For a Personal Loan?
  • Personal Loans are not taxable, as it is money borrowed, which is to be repaid with interest.

    The GST @ 18% applies to process fees and any amounts imposed as penalties, such as unrealized cheques and delayed monthly installment payments.

    GST is also payable on all extra services provided by the Bank concerning a Personal Loan, such as duplicate statements, change of Bank for payments of installment, and foreclosure penalty.

  • How Does The Personal Loan Repayment Work?
  • Funds received as a Personal Loan are deposited as a lump sum in the applicant’s Bank account. The repayment is made via EMI (equated monthly installment) for the tenure period from 12 months to 60 months.

    The EMI comprises the principal & interest amount; deducted automatically by ECS (Electronic clearing services) on a designated date which is convenient and stress-free to obligate.

  • Why is it essential to have a good CIBIL score to get a Personal Loan?
  • The CIBIL (Credit bureau of India Ltd) records and shares the credit transactions of individuals, the number of loans and credit cards, and the payments made toward the same. A score is also generated for the individual based on the credit history.

    Banks are keen to deal with individuals with a good CIBIL Score, which reassures them of timely returns. Financial institutions use your credit history and score to determine whether to lend you money or how much.

  • What are The Benefits of a Personal Loan?
  • A Personal Loan is simply borrowing from an associate when in need. It has numerous advantages.

    • A Personal Loan is unsecured and is given without any security or collateral based on income and KYC documents.
    • Funds via a Personal Loan are quick to get in an emergency, and the processing time is within 72 hours.
    • The interest rate for a Personal Loan is low compared to other credit sources, and the repayment tenure is flexible.
    • A Personal Loan helps to consolidate all debts under a single umbrella and build a good credit score.
  • What are The Disadvantages of a Personal Loan?
  • Borrow wisely for Usage of a Personal Loan as, if not appropriately managed, the cons listed below outweigh the pros.

    • Interest on the outstanding loan amount will be charged daily for non-payment of an EMI. In addition, penalties will be levied with bouncing or EMI return charges adding to expenses.
    • The CIBIL score will be inversely affected by delays in repayment the track of the loan will forever show the return of the EMI and the number of days after which the payment has been cleared.
    • An applicant wanting to repay the loan before the expiry of the tenure will have to adhere to the terms of the lender and may have to pay the penalty on the principal balance amount repaid to close the loan.