A personal loan can be needed at any point in your life. You can use these loans to pay expensive bills, medical emergencies, home renovations, marriage expenses, travelling, appliances and gadgets, etc. Due to digitisation, it has become easy for everybody to apply for a loan online.
Before applying, the concern remains with the interest rate and the documentation required. Hence, before you decide on a loan, you must ensure you are on board with the interest rate you must pay.
What is a Personal Loan?
Personal loans are a form of credit which are popular because they meet your instant requirement but are also unsecured. It is multi-purpose and can be used for anything you want, so there is no steadfast restriction to the amount of loan you can borrow.
A personal loan can assist you with building your credit faster when compared with any other credit form. The discovery of personal loans had been brought on due to the need for instant finances. Sometimes, it is also easier to be eligible for an instant loan over any other kind, which makes it more appealing to everybody.
Benefits and Features of a Personal Loan
Personal loans have carried many benefits and features that increase their preference. These benefits can be anywhere between a low interest rate, fast approval or minimum documentation. In detail, the features and benefits of a loan constitute of the following:
- Minimum documentation
Applying for a personal loan online generally does not require as much documentation as needed in any other kind of loan. The documentation also leads to fast processing and approval for the loan.
Since the loan requires minimal documentation, it speeds up your approval. It occurs if you are applying for a loan using a loan application. Some traditional banks still require you to provide more documentation than others, which prolongs the approval process.
- Saving on interests
When you take a personal loan, you get the minimum interest rate. Sometimes, you are also charged only on the amount of loan you have used and not on the absolute limit of approval. But, you would have to pay the minimum interest rate on the entire amount when taking a loan from a bank. Hence, how much you save depends on the source of your loan.
Tips to Get a Personal Loan at a Low-Interest Rate
Many aspects can ensure you get the lowest interest rate, whether you get a loan from a bank or an online financial institution. Some of these aspects may require some preparation but also give you long-term benefits. Hence, the tips for low-interest rates in personal loans include the following:
- Create and maintain a credit score of 750 or more. The higher your credit score is, the better the interest rate.
- Check with NBFCs or banks for personal loans with whom you already have a loan account or deposit.
- Look for instant personal loans already pre-approved by banks or other sources.
- Compare and check the personal loan offerings from different lenders before you settle on getting a loan from a financial marketplace.
- Keep checking the special interest rates that lenders may offer during the festive season.
Minimal Documentation Required for the Personal Loan
Your documentation would differ depending on the source you take the loan from. By taking a loan from the bank, you would require a significant amount of documentation. However, from a financial institution online, you would only need some documentation, such as the following:
- Proof of identification
- Proof of residence
- PAN Card
Whatever documentation requirement you may have beyond this gets influenced by whether you are a salaried individual or a self-employed professional. If you are a salaried individual, you would need your salary slips of at least the previous three months, along with Form 16 or ITR.
Getting Personal Loans from Different Sources
When looking for a source to take a loan from, you can take it from many places. You can go with banks with which you may have an account or non-banking financial companies.
- Comparatively, the process and offering of an NBFC are better than that of traditional banks.
- NBFCs can provide a lower amount of personal loans than banks.
- NBFCs provide low interest rates and instant approval that can occur within 24 hours of your application.
- Whereas with banks, getting your loan approved and transferred to your account may take three to four days.
How to Apply for a Personal Loan Online?
You need to download the application or go to the website to apply for an online loan through an NBFC. You must then check your eligibility and apply for the loan with the required documents. However, you must follow the steps below if you want to apply for a loan from a bank.
- Check for any pre-approved offer that you may get.
- Check for your eligibility from the bank’s website.
- Fill out and submit your application when you meet the eligibility.
- Check for the approval status of your loan after your application is submitted.
Conclusion
There are many ways to get a loan online, especially with a low-interest rate and minimum documentation. But you must research and compare the loans offered before committing yourself to an offer. And then, you can choose the loan that suits your needs by thoroughly comparing the best ones.
Frequently Asked Questions (FAQs)
Q1. Which banks give the lowest interest rate on personal loans?
Many banks provide low-interest rate loans, including Axis Bank, ICICI Bank, IndusInd Bank, IDFC First Bank, etc.
Q2. How much EMI would I have to pay for the loan?
You can find the exact amount of your EMI using the EMI calculator that both banks and NBFCs provide.
Q3. Does my employment influence the interest rate?
With some banks, you get a special interest rate if you are a government employee. But except that, you also get an individual rate if you are a senior citizen, doctor, or among any special category.
Q4. What is the maximum amount of loan that I can get?
Generally, your monthly income influences the maximum amount of a loan. However, some banks and financial institutions have been known to provide a loan of Rs. 40 lakh.
Q5. Will I need a CIBIL score to apply for a personal loan?
Many banks and financial institutions provide loans without a CIBIL score. It is where the benefit of minimum documentation comes in since you do need to have a credit score to take a loan.
