Personal loan is a type of loan offered by financial institutions to individual’s to meet money needs. Any salaried individual doctor, engineer and others can get personal loan in India which are offered by most of the banks – private, public, co-operative and others. Loans are offered to any individual whether he/she is working in an MNC, government job and others.
There are three most important eligibility criteria considered before approving personal loan for salaried employee as follows:
- CIBIL score: A good credit score is your gateway to avail any type of credit. Every credit lending institution checks your CIBIL score before approving any kind of loan or credit card as it shows your repayment capacity. The CIBIL transunion score ranges from 300-900. FYI – your CIBIL report also contains whether you have taken any type of credit previously, contact information, account details containing all your debt details i.e. type of loan or credit card taken, name of lender, re-payment history, overdue amount and others. Apart from these, the report also contains enquiries by all the financial institutions.
If the score is poor then the chance of loan rejection increase and vice versa.
- Salary: Your salary is the most important factor considered for personal loan. Another related criterion is the city you live and earn monthly income. For e.g. salaried employee in metro city has different salary requirement compared to an individual staying and earning monthly salary in smaller cities. For e.g. Bajaj Finserv asks for a monthly income of Rs. 40,000 for a salaried employee in Mumbai and Rs. 35, 000 for an individual working in Ahmedabad.
- Years in Job: Most of the banks offer personal loans to the salaried that are in job (preferably permanent job) for set number of years. For e.g. United bank of India offers loan to individual’s in service for minimum 3 years.
- Age: An individual’s age is also taken into consideration before approving any loan. Most of the banks have set a minimum age limit of 21 years.
Based on the above factors, quantum of loan is decided and the tenure is decided. And loans are approved within a week or less than that once all of the above eligibility requirements are met. Check out details on personal loan for self employed and doctors.
Uses of Personal Loan:
Since expenses are never ending; the need of money can arise anytime either for marriage, buying household expenses, travel, renovating the house, healthcare expenses and others.
The normal interest rate applicable on the personal loan ranges from 12%-15%. However apart from this, there are various other charges which are often overlooked by the loan applicant and these are loan processing fees, charges for documentation, pre-payment, EMI bounce, duplicate statement issuance of loan agreement or documents, stamp duty and few others. Each financial institution has different charges for personal loan. It is always recommended by the applicant to check all the applicable charges with the credit lenders and then select the best one based on the need.
Necessary documents for personal loan for salaried:
- Loan application form
- Salary slip and/or IT return
- Passport size photographs
- Age and ID proof
- Residential address proof
Most importantly there is no security or collateral required for the personal loans.
How to re-pay:
Almost every bank offers various options to make payment to ease customer’s life such as:
- Direct debit
- Cash deposit
It is always easy to avail personal loan from the bank where you already have a bank account. In this case, banks will only want to know the purpose of taking the loan.