Personal loans – these are the loans that are taken for a certain purpose. They are the primary option under emergency circumstances. They can be spent for any purpose. Once you assure the lender and give genuine reasons, you can spend them according to your needs. These loans are generally unsecured; means the lender cannot auction your asset. That’s why interest rates are often high as there is a greater risk while giving them.
There is a huge jump in the demand for these loans. The equated monthly payments simply known as EMIs are the factor that attracts a huge number of people towards them. The people use these loans for many other purposes like to meet marriage expenses, medical bills, to buy home appliances and other emergencies. There are prescribed systematic criteria to take such loans. The government of India released guidelines related to them.
- Eligibility – this depends from one lending institution to the other, but general criteria followed by the governmental institutions include factors like age, residence, occupational status, and the income status of the individual. The primary condition to provide a personal loan is – one must own a regular income source. It doesn’t matter you are an employee or owner. Some banks also check an individual’s credit history before lending them a loan.
- Duration of the loan – the maximum period for loan is one to five years from the sanction date of the amount of loan.
- Loan Disbursal – it is given within almost 7 days from the application sanctioned by the lending firm. After it, individuals can either take loan amounts as a draft or get it through the bank savings account directly transferred by the bank.
- Limit – there is a limit to borrowing. It depends on the income of the borrower. It also varies as if a person is self-employed or salaried. For the salaried the banks restrict the EMIs from 20 to 50 percent of the salary and for the self-employed this is decided based on annual profits gain by them.
- Selection of institution – select the banks or lenders wisely. It is always good to compare various rates, asset-related information, read documents carefully, and don’t forget to read the terms and policies offered by them. Any carelessness can create problems in the future.
There are many banks and nonbanking financial institutions which provide the opportunity to get personal loans at variable interest rates. Some of them are fraud, don’t fall in their trap. Some banks also provide the option of instant personal loans online. You can choose this option in case of emergency needs. But it’s always safe to read all guidelines issued by the government and check whether the bank is registered under the government of India. For more details you can search online. And another way is to look for a marketplace online where several banks and NBFCs are listed and you can compare among them. After the comparison, you select the service suitable for you.