A personal loan can be a go-to solution when you need extra money to cover unexpected expenses beyond your regular income. Unlike secured loans, personal loans don’t require collateral, making them easily accessible. However, while personal loans can help you fulfill your needs, they have certain terms and conditions. Repaying the loan means returning the borrowed amount and paying interest and other associated charges. Therefore, borrowers must understand the various terms and conditions, such as loan eligibility, prepayment policies, and supportive documents. This article specifies the important aspects of personal loans that borrowers should be aware of.
What is a Personal Loan?
A personal loan falls under the category of unsecured loans provided by financial institutions after verifying the borrower’s eligibility. This loan also known as a multi-purpose loan and consumer loan, is a helping hand to cover the fulfillment of immediate needs.
Terms and Conditions
Here are some of the terms and conditions of personal loans that one must know about.
- Personal Loan Eligibility Criteria
The eligibility criteria for personal loans determine who can avail of this loan. To meet the eligibility requirements, you must be of the required age, have citizenship, proof of income, and employment.
- Age
To qualify for a personal loan, the borrower must be at least 22 years old when taking out the Loan and no more than 58 years old when it reaches maturity. The minimum age requirement ensures that the borrower is legally an adult capable of entering into contracts. The maximum age requirement ensures that the borrower is still working and has a steady income to repay the loan.
- Citizenship
The borrower must be a citizen of India to avail the Loan.
- Employment
The borrower must have a job or personal business to ensure that he can repay the dues on time.
- Monthly Income
The monthly income of the borrower must be INR 20,000 or more. Solid income proof is required.
You can check the eligibility of a personal loan with the loan eligibility calculator available online.
- Personal Loan Documents
To apply for a personal loan, the loan provider asks you to fill out an application form and provide some supporting documents to verify your identity and address. These documents are usually proof of identity, proof of address, and your PAN number. It’s important to be honest and provide accurate and up-to-date information without misrepresenting anything. Any small mistake can lead to disapproval of the Loan.
- Rate of Interest
You can get a Personal Loan at attractive interest rates even without providing any collateral. This is because Personal Loans are based on how much money you earn, and lenders trust that you will be able to repay the loan on time. The interest rate can vary between 12.75% and 44% p.a. The actual interest rate you receive will depend on different factors when you apply for the loan. And if you have a higher income, you’ll get a lower interest rate.
- Loan Tenure
Loan tenure refers to the time it takes to repay the borrowed money and all associated charges. Usually, the loan tenure for a personal loan is up to 42 months, but some lenders may offer even longer repayment periods, depending on the loan amount. To repay this Loan, the lender sets a specific amount to repay every month, which is known as the EMI. In case you miss any of the EMI, the lender informs you first, and after that, they may report it to credit bureaus.
- No Collateral
You can obtain a Personal Loan without offering any collateral, so you don’t have to use your property or jewelry as security. This way, you can get a loan without worrying about mortgaging your assets.
- Other Hidden Charges
When taking out a personal loan, it’s important to remember that there may be additional fees in addition to repaying the principal amount borrowed and the agreed-upon interest charge. These fees may include loan processing charges and prepayment and foreclosure fees, which are calculated as a percentage of the amount being pre-paid.
Conclusion
Personal Loans from IIFL Finance offer flexible terms and conditions, allowing you to borrow anywhere between 5 thousand to 5 lakhs easily. However, reviewing all related documents and information is important before applying for a loan.
Attach SS
