Personal Loan FAQ

To get a personal loan, you must have a steady source of income, whether you are a salaried worker, an entrepreneur, or a professional. A person’s eligibility is also based on the company he or she works for, his or her credit history, where he or she lives, and other factors that the lender considers important.

Yes. Even though the minimum amount of a personal loan can be different from one lender to the next, most have set the minimum principal amount at Rs. 30,000.

When figuring out how much a salaried person can borrow for a personal loan, the bank or financial institution makes sure that the EMI doesn’t cost more than 30%–40% of the applicant’s take-home pay. When figuring out the amount of the personal loan, the applicant’s other loans that are still being paid are also taken into account. And for people who work for themselves, the loan amount is based on their most recent Profit/Loss statement, which shows how much money they made and how much they lost, as well as any other debts they may have, such as business loans.

Personal loans have terms ranging from 12 to 60 months. The borrower may, on a case-by-case basis, occasionally approve shorter or longer terms for personal loans.

Yes, you can apply for a personal loan by yourself (alone) or with a co-applicant (jointly). A family member, such as your spouse or parents, must be a co-applicant. Your loan application will be handled in a higher income category if you have a co-borrower, allowing you to get a greater loan amount. However, bear in mind that if you or your co-applicant have a poor credit history, your loan application’s chances of success may suffer.

Though personal loan paperwork requirements differ by financial institution, some of the main papers that you would need to present with your personal loan application include:

• Proof of income (salary slip for paid employees/recently recognised ITR for self-employed).
• Address Verification Documents.
• Documents proving one’s identity and others.
• Certified copies of degree/license (in the event of a self-employed professional) and other documents required by the lender.

The decision to approve a loan is solely up to the loan sanctioning officer, who grounds his or her choice on the standards set by the bank or financial institution. It might take anything between 48 hours and two weeks to complete the process. The loan, if approved, is issued by the bank within seven working days following the completion of the verification procedure and receipt of all required papers. Keep all required paperwork prepared, together with postdated checks (PDC) and/or a completed Electronic Clearing System form, in order to prevent delays in loan processing and payout.

Before selecting a certain service provider, it is usually a good idea to examine the offerings of other banks. Use online resources like the loan eligibility calculator and personal loan EMI calculator to identify the loan choice that best meets your needs. When choosing a loan provider, it’s important to take into account a number of important elements, such as interest rates, loan terms, processing costs, and others.

Credit score, current income level, and current obligations are some of the major aspects that decide the maximum loan amount that may be sanctioned to you, even though loan approval criteria may vary from bank to bank. A high credit score (nearer to 900) demonstrates that you have paid off past loans and/or credit card balances on time, giving lenders confidence that you are a reliable borrower and allowing them to approve a larger loan amount. Your ability to make payments depends directly on your present income level and your liabilities (including any unpaid loans, credit card balances, and current EMIs). As a result, you would be approved for a smaller personal loan amount than someone with a higher salary or fewer financial obligations if you fall into a lower income band or have a lot of unpaid credit card bills or outstanding loan EMIs.

After your application for a personal loan has been processed and accepted, you will either be given an account payee cheque/draft in the amount of the loan, or you will have the option to have the money transferred into your savings account electronically.