There may be so many reasons for which you may need money. This may be to finance your treatment, remodeling of your home, finance wedding, or get your hands on the most recent version of Xbox for that perfect gaming experience. There are times when people seek loans to meet some sudden unforeseen expenditure. Debt consolidation is one of the most common reasons for seeking personal loans as the money taken on the loan is used to pay off multiple small loans or pay off outstanding bills or interests on credit cards. Either they may have to wait to have that kind of savings or choose to take a loan that they would repay in easy installments every month.

Personal loan serve best for those who need the money immediately and know that they would repay the amount diligently. Many financial institutions do not seek any security or collateral while granting instant personal loan to their customers. While seeking a loan for personal requirements may not be difficult it is important to take care of certain necessary steps before jumping to take one.

Steps To Avail A Personal Loan:

Step 1: Understand your loan requirement

First, assess the amount of loan needed. Then evaluate if the loan is needed. Balancing the pros and cons will lend clarity on the amount of loan that would be needed. Depending on the requirement, one may choose to apply for a small loan upto Rs. 25 lakhs*.

Step 2: Check for loan eligibility

Eligibility to get the desired loan amount passed has a lot to do with the credit score. Having a credit score on the higher end helps. However, if one has a history of late repayment, banks or lending institutions may either reject the loan application or charge a high rate of interest. The Personal Loan Eligibility Calculator available online helps one to find out how much one can borrow given one’s financial condition at that point.

Step 3: Research well to compare

Personal loan rates are not the same for each bank or financial institution. Also, the loan conditions regarding payment frequency, relaxation on late repayment, penalty options differ from one to the other. Comparing such details online before applying for a loan helps. Personal loan interests are comparatively high, so it serves well to research and contrast beforehand.

Step 4: Check for loan installments

Paying off a loan on time without defaulting on any installment necessitates regular income and good financial condition. To gauge the liability of the EMIs that would be due, the loan tenure available and the feasibility of paying off such a loan, it is advisable to use the Personal Loan EMI Calculator online. Just fill in the amount of the loan needed and the desired loan tenure at the available interest rate to get access to the EMIs that would have to be paid.

Step 5: Check for loan application methods

One may either approach a bank or a financial institution for loans or apply online. In today’s digital world, where one can access information with just the click of a button, it makes sense to apply for a loan using any of the methods including Net Banking or apply for the loan on the lender’s website. For detailed information, one may ask the financial institution representative who would furnish the much-needed details and simplify the loan application process.

Step 6: Check for details in the fine print

Many borrowers complain about ignorance of certain financial terms and jargons printed in loan documents, thus, spelling trouble in the long run. Before signing any loan agreement, one must have clarity regarding the loan amount, monthly EMI, repayment terms and added charges. It is important to read the fine print in the loan document carefully before signing it.

Step 7: Submission of documents

Find out the documents necessary for approval of the loan application. Be it a bank or a lending financial institution, it is important to submit hard copies of the required documents. However, the nature of some documents may differ for salaried and self-employed individuals.

Salaried individuals must submit the following documents:

  • Application form filled in with all details including name, address, date of birth, nature of employment and loan amount.

  • A copy of ID Card like PAN Card, Voter ID Card, Aadhaar Card or Driving License

  • Salary slip of the last three months or bank statement showing salary credited over the past three months.

Self-employed individuals must submit the following documents:

  • Application form filled in with all details including name, address, date of birth, nature of employment and loan amount.

  • A copy of the identity card or proof of permanent residence.

  • Copy of the ITRs filed during the last three years.

  • Copies of certificates of business registration.

Hence, there may be multiple rationales behind taking a personal loan. Debt consolidation is a primary reason though there may be other reasons too. These kinds of loans may be availed without security or without providing any collateral.

Since there are multiple banks and institutions agreeing to give personal loans to their customers, it makes sense to compare and contrast before applying for one. Before agreeing to the loan amount, one must check on the Personal Loan EMI Calculator for the estimated value of the loan installments to be paid and the corresponding loan tenure.