In today’s finance landscape, Personal Loans are becoming the go-to credit instrument for individuals who find themselves in a financial crunch. These loans are unsecured and can be availed online. Various banks and Non-Banking Financial Companies are offering Personal Loans with prepayment options as well.
Personal Loans come with no end-use restrictions, and you don’t have to worry about submitting collateral. The eligibility criteria are easy to fulfill, and the loan applications are available online. You can also choose your loan tenure according to your convenience.
Read on to find out more about Personal Loans and Personal Loan prepayment.
What are Personal Loans?
Personal Loans are unsecured credit instruments that can be used without any end-use restrictions. You can use a Personal Loan for various end-uses, some of which are enlisted below:
- Home Renovation
- Funding higher education
- Hosting a wedding
- Covering medical expenses
- Traveling abroad
- Debt consolidation
- Buying high-ticket products
Personal Loan eligibility criteria
- Age: The applicant should be 24 years old at the time of application and 58 years old at the time of loan maturity.
- Citizenship: The applicant should be an Indian citizen only, since most lenders do not give loans to non-citizens.
- Employment: The applicant should be full-time employed with the state or central government, PSU, MNC, Listed, Unlisted Public Ltd., Private Ltd., LLP, colleges and schools, or companies that are listed internally.
- Work experience: The applicant must have job experience of at least 2 years, with 6 months of stable employment with the current employer.
- Monthly income: The applicant needs to have a net monthly take-home salary of a minimum ₹40,000.
Documents required for Personal Loan
- KYC documents: Lenders accept an Aadhaar card or PAN card as your KYC documents.
- Address proof: You can submit soft copies of your Passport, utility bills, or your rental agreement.
- Income documents: You will be required to submit your latest salary slip.
- Financial documents: You will have to procure your salary credit statement for the past 3 months.
- Employment proof: Official email ID confirmation or Employee ID card in case Email ID is not available.
How to apply for a Personal Loan
You can apply for a Personal Loan online by following these simple steps:
Step 1: Visit your lender’s official website.
Step 2: Go to the page dedicated to Personal Loan product
Step 3: Click on ‘Apply Now’.
Step 4: Fill out the online application.
Step 5: Upload the soft copies of the supporting documents, to establish your identity and confirm your profile.
Step 6: Await verification and confirmation.
Step 7: Get funds disbursed into your account, once verification and confirmation are successful.
Personal Loan Prepayment: How it works
You might think of different ways to either reduce or consolidate your debt. One of the most popular ways is to repay the loan in either part or full before the loan tenure ends. Personal Loan prepayment not only reduces the debt but also helps you save the funds that you might have paid in the form of interest.
Personal Loan prepayment option is offered by most lenders these days. This has made it easier for borrowers to repay their loans sooner, allowing them to pay in parts or in full. The Personal Loan prepayment option can be highly beneficial for borrowers, but it is important to know a few things about the process before you decide.
- Lock-in period: Most banks and Non-Banking Financial Companies (NBFCs) have a lock-in period for Personal Loans. The lock-in period usually ranges between 1 and 3 years, during which you cannot pre-pay your Personal Loan.
- Penalties: Lenders also charge penalties for loan pre-payment before the end of the Personal Loan lock-in period. Ensure that you check the penalties and other charges before you decide to prepay the loan.
Personal Loan prepayment can be beneficial for you if you wish to end your debt cycle. Prepayment can help you save on interest as well. Most lenders are offering Personal Loan prepayment options to help borrowers manage their finances in a better way in case they are overwhelmed with the debt cycle.
The decision to prepay the loan depends on a host of different factors such as the type of the loan, interest rate, EMI amount, and loan tenure. The penalties associated with Personal Loan repayment also vary from lender to lender. In case you want to prepay your Personal Loan, ensure that you check with your lender if they charge any penalties or foreclosure charges.