Personal loan is an all-purpose loan for personal use. It could be for any expenses such as be your child’s wedding, going on vacation, purchase of consumer durables, medical expenses, buying jewelry, margin/ down-payment for a home loan, transfer of credit card out-standings buying of new furniture and various other needs that arise for an individual or sudden business requirements. Personal loan does not require any security or collateral and thus have a disadvantage compared to loans against security in that they come for a higher rate of interest. Personal loans are loans provided based on the borrower’s past credit history and ability to pay. Typically personal loans range from Rs. 0.50 Lakhs to Rs. 30.00 Lakhs with a tenure typically ranging from one to five years.The interest rates of Personal Loan are allotted based on the salary of the customer, amount being borrowed and credit history, amongst others. Personal Loan requires the least bit of paper-work and is usually approved within 48 hours of application submission.
Eligibility Criteria:
Personal loan eligibility depends upon various factors which differ from bank to bank. Your eligibility is determined considering following parameters:
- Current income: The main factor of course, is your ability to repay the loan
- Applicant Age: Banks generally give out personal loans to salaried individuals typically between the ages of 21 to 60 years. For self employed individuals this range is from 25 to 65 years.
- Total Years of work experience
- Nature of your job
- Category of company you work for: Companies/ Employers are grouped into categories on basis of their own records. Public sector employees and employees working with reputed and established private companies are more eligible for availing personal loans as compared to others as there is stability in their income.
- Current obligations you are paying for existing loans availed are factored while arriving on your personal loan amount eligibility
- Past credit history: Having a healthy CIBIL score also helps in improving your eligibility towards getting a personal loan
Personal Loan Application Fees and Charges:
Personal Loan Lenders levy some fees and charges at the time of loan sanctioning which includes Processing Fees. Prepayment of the loan is possible after repayment of a minimum of 6 EMI’s. Foreclosure charges would be applicable as per the banks term and condition. Part pre-payment can be made after 6 months from the Disbursement of the Loan, once in a financial year and the same may vary with bank to bank.
Unsecured Dropline Overdraft
Drop-line overdraft is a hybrid between a term loan and an overdraft facility. You are charged interest only on the amount utilized by you. Dropline overdraft is a facility granted to you where you can overdraw your current account up to an agreed limit. Overdraft is an efficient form of borrowing as you pay interest only for the time you use the money. It gives you flexibility in terms of you can at any time deposit money into the account to reduce the outstanding balance or can draw out money whenever you need it as long as you do not exceed the limit. Interest is calculated daily on the fluctuating outstanding balance and is normally charged at the end of each month. The overdraft utilized determines the interest that will be payable by the customer. This product is useful for professionals, Sole Proprietors, Proprietorship Firms, Partnership Firms or a Private Limited Company in the business of manufacturing, trading or services.