Personal Loans are the only visible options to us when we need help with our sudden plans or requirements. There are many banks and financial institutions those are always ready to help you with personal loans. However, my suggestion is, until and unless, the sudden requirement or plan is not very much important or urgent, stay away from Personal Loans, if at all possible.
Eligibility for Personal Loans:
- Do you receive a regular income? If yes, then you are “in”. Any one who gets a regular income, is eligible for Personal Loan, salaried and self employed both. Salaried person like CA, Doctors, Engineers, Clerks, or any other salaried person. Self employed such as businessmen and those who get a regular income in their bank accounts from the self employment.
- Second consideration is your age. If your age bracket is between 21-60 years, then definitely you can apply for a Personal Loan.
- Other criteria for the eligibility varies from bank to bank or one financial institution to another.
Eligible Loan Amount:
You may get a Personal Loan equal to 20 times of gross salary upto maximum of Rs.500,000/- . Minimum net take home pay of 40% of gross salary will be left for your bread and butter. And from the remaining 60% of your gross salary after all deductions will decide your eligible loan amount. Deductions could be LIC Premium, Fees for your kids, your house rent, etc.
You may get a flexible repayment period. Generally, repayment period is upto 12 months to 60 months, again varies from bank to bank or one financial institution to another.
Rate of Interest:
Rate of Interest for Personal Loan is higher as compare to any other loans like Home Loan, Education Loan, Business Loan, etc. This is one of the biggest reason that if possible avoid taking personal loans. Rate of Interest varies from bank to bank or one financial institution to another.
Processing Charges and other Charges:
Processing Charges varies from bank to bank or one financial institution to another. It could be minimum Rs.500.00 + applicable taxes and maximum upto 2.5% of the loan amount + applicable taxes. Mostly, PSU banks will prove to be cheaper when we talk about processing charges as compared to private sector banks.
This is not it. Apart from processing charges, you may have to pay few other charges like CIBIL Report charges, file charges, stamp duty charges, legal or incidental charges, credit assessment charges, cheque swapping charges, charges for late repayment of EMIs, loan cancellation charges, cheque bounce charges, charges for NOC, pre payment charges, etc, etc & etc.
Beware when you are applying for a Personal Loan and thoroughly check all the details about the loan scheme you are about to opt for. Since Loan agreements are so lengthy, that most of us do not even think about reading it. At times, there are certain hidden charges or terms, later which may make you feel like trapped with your Personal Loan.
The documentation for a Personal Loan varies from individual to individual. The requirements are based on your profession, income and loan requirement. The most basic documents which are needed as follows:
- Identity Proof: Copy of passport/voter ID card/driving license
- Proof of address: Copy of ration card/telephone or electricity bill/rental agreement/passport
- Last 6 months bank statement/6 months bank passbook
- Latest 3 months salary slip/ current dated salary certificate with the latest Form 16
- ITR for last 3 Assessment years
Security or Terms & Conditions or Guarantee:
Your salary needs to be routed through Salary account maintained with the bank. Along with this you may have to give third party guarantee by a person having worth at least equal to loan amount and acceptable to Bank. However, terms & conditions, security and guarantee, these all may vary from bank to bank and from one financial institution to another.
Are Personal Loans tax deductible?
No, you do not get any tax benefit on interest or principal repayment of your Personal Loans.
Banks offering Personal Loan:
There are many PSU banks like SBI, Central Bank of India, Bank of Baroda, Oriental bnk of Commerce, etc. and private sector banks such as HDFC Bank, ICICI Bank, Citi Bank, etc. These banks offer personal loans under various schemes like Personal Loan for Women Employee, Corporate Personal Loan, Personal Loan to Pensioners, Non-Corporate Personal Loan, Personal Loan for Teachers, Personal Loan for Government Employees, Personal Loan for Doctors, etc.
Citi Bank offers you Loan on Call. To know more and to apply, click on CALL ME. Also, if you are already a Citi bank customer, then you can login to Citibank Online using your IPIN and check your eligibility. And, if you are eligible, you can book Loan instantly with no documentation by clicking on Book Now.
Where as, ICICI Bank has Personal Loan Online application facility to offer you with a built in eligibility calculator to know your eligibility in less than 60 seconds and an EMI Calculator tool to finalise your offer before you apply. You can Check your Eligibility .
You can also read HDFC Personal Loan.