Many people avail of a personal loan these days as the capital can be used for any purpose without any restrictions from the lender’s side. However, people have many valid questions in their minds. A person can always put these questions in front of the executives of the lender organization.
When it comes to a personal loan, you must choose an organization that offers you repayment flexibilities as a convenience apart from providing you with a decent capital. Here, you can go through the leading FAQs that might commonly arise in your mind while planning to avail a personal loan.
Leading FAQs concerning personal loans
The following questions and answers can help you know more about personal loan and their management. The answers are given in a factual manner that will help you to know more about personal loan.
Are personal loans available in fixed and floating rates?
In India, personal loans are available in both fixed and floating rates. However, this feature might not be present in all the banks that provide personal loans. You must primarily know the difference between the fixed rate and the floating rate of personal loans. In the case of fixed-rate personal loan, the interest rate remains the same throughout the tenure of repayment. However, with changes in the MCLR rules, the interest rate of the floating rate personal loan can fluctuate. In case any changes are brought in the repo rate, the rate of interest can change in case of a floating rate personal loan.
What are the vital documents that you need for a personal loan application?
There are some vital documents that you will need to provide to the lender organization. Your lender will verify these documents before they grant you a capital. Always ensure keeping the photocopies of the following documents while expecting to get a personal loan.
- Any address proof with your photograph
- Financial documents like PAN card and payslips supporting the authenticity of your monthly income
- Business-related documents like the trade license and bills (for the self-employed borrowers)
What are the steps concerned with the sanctioning process of a personal loan?
There are different steps in which a personal loan is sanctioned for a borrower. Here a brief note regarding the main steps is given.
- Approach for a personal loan
- Approval of getting a personal loan
- Application form fill up
- Document verification process
- Loan capital disbursal
Always remember that the lender entity will finalize the capital of your personal loan after judging the reason for your need, financial condition, and creditworthiness.
How to choose the most reliable personal loan lender?
When it comes to choosing the best personal loan lender, you should keep two things in mind. Try selecting a lender organization that allows you to enjoy conveniences on repayment. Moreover, you must check that the interest rate is low than other entities in the market.
What is the way to compare personal loan plans?
Earlier, it was a tough job to compare the personal loan plans offered by different banks and financial entities. Nowadays, you can directly visit the site of any organization that delivers personal loan plans and check the percentage of interest of the personal loan. You can also get all the useful information regarding the eligibility and the repayment structure of the personal loan. Many websites have a personal loan interest calculator that can help you to check the exact amount of the monthly EMI.
How much money can a person borrow as a personal loan capital?
There are different considerations that lending companies make while providing you with personal loans. Mainly, they check your monthly income of the borrower. If you are a salaried person, you can get up to 30% of your total income. In case you are a self-employed person, the loan capital will depend upon the average profit of your business. Remember, that the lender organization will not exceed the 30% bar as personal loans are unsecured in nature.
Why is the interest percentage high for a personal loan?
The interest percentage of a personal loan is higher than any other loan as it is unsecured. You should always know about the EMI amount that you have to clear against the loan capital before taking it. The EMI that you need to pay will be determined by the interest rate of the loan. It is always advisable to take a personal loan only if the borrower is able to deliver the repayments on time. Defaulting the repayments might result in strict legal actions against the borrower.
So, these are some most commonly asked questions when it comes to a personal loan. You will find a lot of banks and NBFCs giving personal loans. Although, you can get the loan capital easily, make sure you clear the repayments within tenure. With proper management and strategies, you can easily avoid the debt trap.