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Personal Loan FAQ's

What is a Personal loan?

An unsecured loan is called a Personal loan. This implies that you don’t have to give any security, as with a car loan or a home loan, where the underlying asset is mortgaged with the bank. Normally, the bank does not ask for guarantors either. More advantages: minimum documentation and speedy clearance (within three to seven days of applying) and there is no monitoring of 'end use' -- you can use the loan for any purpose you like.

How do I take a Personal Loan?

You can always start by checking out with different banks offering you the loan for the best offers - interests - EMI schemes etc. Also find out the eligibility criteria and the documents required to submit before you apply.

How is my loan eligibility determined?

Loan eligibility depends upon various factors which differ from banks to banks. The main factor of course, is your ability to repay the loan. Also your profile, in terms of residence and the place you work in also matters. Do make sure to check all such other eligibilities before applying.

What is the maximum tenure of a personal loan?

Personal loan is a short tenure loan. Most of the banks provide you loan for maximum 3 years (36 months) to max 5 years(60 months).

How much personal loan that I can take?

Loan eligibility depends upon various factors. The main factor is your ability to repay. The bank would like that the instalment you pay should not exceed more than 40 to 50% of your net salary or 2-3 times of your income tax return.

What are the fees and charges payable and when are they payable?

Apart from the rate of interest bank also do charge some fees which are of usually two types. Once when you are applying for the loan and once when you are preclosing the loan. The fees when charged at the time of processing called as Processing Fees vary from 2-3% of the loan amount. This could be reduced if you have the ability of bargaining. The second charge is the prepayment penalty paid at the time of preclosure. This too varies from 2 –3 %. Similar to processing charges, you can also try to get this fees reduced.

What is the rate of interest that will be charged on Personal loan?

The interest rate varies from bank to bank. And usually it varies from 14%-26% depending upon your profile and the policies/scheme you opt for

How soon can I get my loan money?

Usually banks disburse your loan within seven working days. However, it is recommended that you keep all your documents ready and in order, especially the
Postdated cheque (PDC), to avoid any delays. The loan is disbursed only after the completion of submitting of all required documents.

Can I apply for loan, jointly with my spouse?

Yes. Personal Loans can be applied jointly with a co-applicant (either be your spouse or your parents). This helps you to increase your income eligibility and you can also avail for a larger amount of loan, if you want to, as your co-applicants income also gets added to your income and that total is taken into consideration for calculating the loan amount you will be eligible for.

How do I repay my loan?

At the time of applying for the loan, banks ask you to submit all the postdated cheques (PDC) for each month with EMI which is equal monthly installments or they ask you to sign an Ecs (Electronic clearing system) with the account that you hold. Mostly these cheques/Ecs are presented on 1stweek of each month, so please do confirm with the bank on that respect.