Personal Loan

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What is Personal Loan ? What are the Different Types of Personal Loans ?

Personal Loan is primarily an unsecured loan given by Lender (Bank, NBFC etc) to an Individual (Borrower). The end usage of Personal Loan is not monitored very strictly by the lender and is usually left to the discretion of the individual (borrower). A Personal Loan facility is provided to the borrower (Salaried Professional or Self Employed Individuals), based upon the judgement and informed decision of the Loan Sanctioning Officer. The judgement and informed decision is based upon documentation provided by the borrower (applicant). Personal Loans are mostly taken in the following instances by individuals :

  • Vacations
  • Debt Consolidation
  • Medical Emergency
  • Buying Specific Home Assets
  • Family Function (Important Event)
  • etc.

How is my Personal Loan Eligibility determined ?

Personal Loan Eligibility of an individual (borrower) is determined on numerous factors. Some of these also vary from Lender to Lender. However some macro factors which define the Credit Worthiness of the borrower are as follows :

  • Credit Score (CIBIL, EquiFax etc). Having a Good Score is Advantageous.
  • Monthly Income :

    • Self Employed : Monthly Business Income (Gross and Net) & Company Credentials.
    • Salaried : Salary (Gross and Net) per Month & Employer Credentials.
  • Previous Loan History : Good Track Record really helps in getting a Good Loan Offer from Lender.

What is the minimum and maximum loan limit permitted in Personal Loans ?

  • Minimum Loan Amount : INR (Rs.) 50,000/-
  • Maximum Loan Amount : INR (Rs.) 50,00,000/-

What is the Tenure of Personal Loan ?

1 Year to 5 Years.

Are there any Tax Benefits associated with availing Personal Loans ?

No. Personal Loans do not have Tax Benefits associated with them, like in the case of Home Loans.

What is the difference between Part Payment, Pre Payment and Pre Closure ?

  • Part Payment: Part Payment amount is less than the Total Principal Amount of the Loan. Part Payment is made before the Loan Amount becomes due.
  • Pre Payment: Pre Payment is a situation when the Borrower pays off part of the Personal Loan before it becomes due as per the EMI schedule.
  • Pre Closure: Pre Closure is the situation when the Borrower pays the complete loan payment before the expiry of Loan Tenure, as per original loan contract.

What parameters decide the Rate of Interest for Personal Loans ?

  • Loan Amount
  • Loan Tenure
  • Borrower’s Credit Worthiness
  • Prevailing Market Lending Rates
  • Monthly Income (Self Employed or Salaried)
  • Internal Policies, Strategies and Mechanism of the Lender

What happens if I miss an EMI Payment on Personal Loan ?

Missing of EMI Payment leads to reduction in Credit Score (leading to future Loan Issues) and penalty. If EMI Payments are not brought on track quickly, Lenders (Banks, NBFC etc) can also initiate Legal Action. It is always advisable that EMI Payment Schedule is always adhered to.

How long does it take to avail a Personal Loan ?

Three Working Days, after submission of all necessary documentation with Klariti TaxCorp LLP

Do I have to provide any Security, Collateral, Guarantee Letter etc to avail Personal Loan ?

No Security, Collateral, Guarantee Letter is required for Personal Loan Approval (subject to satisfactory Credit Worthiness of the Borrower, as per terms laid down by the Lender).

Do I have the option of Fixed Interest Rate or Floating Interest Rate ?

    You can avail either option, while making repayment of the Personal Loan.

  • Fixed Interest Rate : Interest Rate shall remain fixed during the entire duration of the Personal Loan.
  • Floating Interest Rate : Interest Rate can increase or decrease based on Bank’s Lending Rates.