Summary- Personal loan is the multi purpose loan plan and is available without any security. These loans generally charge a higher rate of interest as the lender is in the risky zone.
Lending is a business for banks and they earn profit from it. Every negligence attitude on the borrower's side add to the profit volume of the lender. Hence, the borrower should be familiar with the terms and conditions of the loan. This awareness not only saves money but also prevents any sort of financial adversity in the future.
At the time of lending, the lender may not make the whole process an open book. There are some financial jargons associated with all types of loans. It is true that everyone is not a financial expert. But, awareness and alert mind is expected from every borrower.
Personal loan is a flexible loan and can be used for a variety of purposes. The purpose of borrowing may be paying for a wedding, re-decorating your home or an expensive holiday. Today, most of the major banks as well as some finance companies offer these loans. The main advantage of this loan is the flexibility of using the money for whatever purpose you intend. Secondly this loan is generally unsecured which means you don't have to offer security or obtain a guarantor to avail this loan. There is minimal paperwork involved with this loan since the bank doesn't have to verify assets.The disadvantage of this loan is that it is relatively difficult to obtain and the qualifying criteria are stricter than the
loan against property. The rate of interest associated with this loan is also higher and may be as high as 25 per cent per annum. The rate of interest mounts if your credit profile is poor.
The factors that determine the amount of a personal loan and the payable interest rate
The size of the loan amount depends mainly on the monthly income of the borrower. Other Parameters include the age of the borrower, profession, education and history of repaying other loans. You may obtain a loan amount around twice your annual income and the maximum loan amount has a limit of Rs 10 lakh. It may be possible to associate the income of your spouse in order to increase your loan amount.
You must read the fine print to see what additional fees are associated with the
personal loan. If possible try to negotiate down these charges with the lender at the time of loan approval. Such extra charges may include a processing fee which covers the cost of processing your loan application and documentation charges to cover the expenses of verifying the documents provided by you. In addition you may have pay service tax on both interest payments The main documentation required for the loan approval is a proof of identity and proof of residence (passport, voter ID etc.)and the proof supporting your income. The latter may be a salary slip for salaried individuals or an income tax return for the self-employed borrowers.
For more information about
home loans and
loans for NRI in India. Please visit our website:
http://www.paisawaisa.com/
