Personal loans can be used for a variety of reasons and can range from Rs. 1 lakh to Rs. 30 lakh and even more. If you have some smaller immediate financial requirements, a small personal loan can be an excellent choice for you. These unsecured loans generally range from Rs. 50,000 to Rs. 5 lakh and come with a tenure of 6 months to 12 months.
If you are looking to apply for a small personal loan for the first time, make sure that keep the below-mentioned points in mind.
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Selecting a Lender
Several banks and NBFCs in India offer quick personal loans without any collateral. So, if you are searching for the best personal loan, make sure that you shop around for a while to select a reputed lender who is offering the loan at a competitive rate. Compare the interest rate charged by different lenders to select the best. You can also opt for online personal loans which offer enhanced convenience by allowing you to apply for the loan online.
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Additional Charges
When taking a personal loan, it is also important to consider the additional charges, like processing fee which is generally 0.5%-1% of the loan amount, penalty on missing EMIs, prepayment charges, etc. Apart from the interest rate consider these charges as well to protect yourself from any expensive surprises later. Many of the lenders have hidden charges and fees which can make the loan expensive for you. Make sure that you check the terms and conditions of the loan before signing the loan documents.
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Eligibility
Lenders have eligibility criteria on the basis of which they approve small personal loans. This can include a consistent source of income, good credit history, etc. The eligibility criteria of different lenders can slightly vary. Even if you have a bad credit score, there are lenders who would still grant you the loan but at a higher interest rate as compared to someone with a good credit score. Moreover, if you have a good relationship with the lender, you can further negotiate the interest rate.
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Documentation
When applying for personal loans, you’ll also be required to submit a few documents. These include KYC form of the lender (eKYC in case of the online personal loan), job continuity proof, ID proof, address proof, a copy of PAN card and latest Form 16 or IT returns. Once these documents are submitted along with the duly filled KYC form, the lender will then initiate the approval process.
Remember these points when applying for personal loans to make sure that the application and repayment process is smooth and free from any kind of discrepancies.
