A personal loan comes in handy when we are short of funds and need money as soon as possible. When taking out this loan, the prospective borrower is not required to provide collateral or security against the loan, unlike a gold loan where gold ornaments are taken by the lender as security.
Where can you get a personal loan?
While one can contact their companions and family members for individual advances, loaning foundations, for example, banks and non-banking money related organizations (NBFCs) offer individual credits in a more organized and ‘on-tap’ design. Different banks like State Bank of India (SBI), HDFC Bank, NBFC like Tata Capital, Bajaj Finserv, And likewise offers individual advance.
Maximum and minimum amount
The minimum and greatest amount that can be taken may fluctuate starting with one loaning organization then onto the next. For example, as indicated by its site, SBI offers an individual advance of up to Rs 20 lakh to salaried people.
As per Tata Capital’s site, you can profit a base individual advance of Rs 75,000 and a limit of Rs 25 lakh relying upon your qualification.
Fixed or floating interest rate
While taking a loan, one should check with the lender whether the interest rate offered on the personal loan is fixed or running. In case the interest rate is fixed, the change in the bank’s MCLR will not affect your Equated Monthly Installment (EMI) amount.
Eligibility to apply for a personal loan
The eligibility criteria for approving personal loans vary from lender to lender. To be eligible for a personal loan from SBI savings account interest rate, your minimum monthly income should be Rs 15,000, whether you have a salary account with the bank or not according to the bank’s website.
On account of HDFC Bank, to be qualified for an individual advance must be somewhere in the range of 21 and 60 years old and have employment for at any rate two. Minimum one year with current employer. .On the off chance that the individual isn’t an HDFC financial balance holder, he ought to get at least Rs. 50,000 should be pay.
Your credit score will also play an important role in determining whether you are eligible for a personal loan or not.
Tenure of personal loans
Typically, a personal loan is offered by lending institutions such as banks for a maximum period of five years. However, the duration may vary from lender to lender.
Types of personal loan interest rates
There are two types of interest rates applicable on personal loans, these are:
Fixed-rate of interest
Floating rate of interest
- Fixed interest rate: In this case, the rate of interest remains constant throughout the loan term. Consequently, the monthly EMI amount also remains fixed during the loan repayment period. This can help you plan your monthly expenses in the long term.
Types of personal loan interest rates
There are two types of interest rates applicable on personal loans, these are:
Fixed-rate of interest
Floating rate of interest
- Fixed interest rate: In this case, the rate of interest remains constant throughout the loan term. Consequently, the monthly EMI amount also remains fixed during the loan repayment period. This can help you plan your monthly expenses in the long term.
- Flat rate method of interest rate: In this method, interest is calculated on the total loan amount borrowed at the beginning of the entire term of the loan.
- Reducing the balance of interest calculation: As you pay your monthly EMI, parts of the loan amount, and an interest component. Thus, the principal loan amount keeps decreasing over time. In this method, interest is calculated on this decreasing loan amount, not the total amount borrowed initially.
Interest rates for different applicant types
Most lenders consider several factors when deciding the rate of interest applicable to personal loan applicants. One of these is the applicant type. The following are some details on how personal loan interest rates and which mutual fund is best to vary depending on the type of applicant:
Salaried and Self-Employed: Whether the applicant is salaried or self-employed can significantly affect the interest rate applied to personal loans. Typically, salaried employees with a stable employment record working with reputable organizations get a personal loan at a lower interest rate than self-employed. This is because salaried employees working with a reputable company have higher job security and in most cases better ability to repay their debts.
However, self-employed applicants with a stable source of income can also obtain personal loans from banks and NBFCs at competitive interest rates.
Some banks and NBFCs like Bajaj Finserv and Fullerton India prefer the interest rate for women. It is to encourage salaried women, entrepreneurs, and professionals to fulfill their dreams and be financially stable.
