When applying for a personal loan, several questions come to your mind regarding the process, personal loan rate of interest, its EMI amount, repayment tenure, which bank to opt, etc. It would be a bit tedious to ask every question out of concern to a bank employee or their customer care representative, that too at these tough times of the COVID-19 pandemic.
Considering the need to inform every aspect of the personal loan and its system, here’s a list of frequently asked questions answered in detail:
- What is a personal loan?
- What are the uses of a personal loan?
- Who are eligible to apply for a personal loan?
- How should a personal loan be repaid?
- What are the factors considered for approving a personal loan?
- Is it good to choose the lowest EMI for repaying the loan?
- What is the minimum salary required for a personal loan?
- What is the minimum loan amount to be borrowed as a personal loan?
- What is the required credit score to be eligible for a personal loan?
- Which is the best bank for taking a personal loan?
What is a personal loan?
A personal loan is a 1-5 year unsecured loan that is used for an individual’s purposes when running out of funds. A personal loan does not ask for any collateral securities in return.
What are the uses of a personal loan?
A personal loan, as the name suggests, is used for personal purposes. A personal loan doesn’t have any restrictions on its usage and can be used to make a big purchase or cover any huge bills. It can be anything and depends on the sole discretion of the borrower.
Who are eligible to apply for a personal loan?
- Salaried employees/ employees of public and private limited companies, Govt. sector employees, businessmen/ entrepreneurs
- Minimum age of 21 years and maximum age of 60 years at the time of maturity of the loan.
How should a personal loan be repaid?
A personal loan can be repaid in monthly EMI’s which can be calculated as to how much monthly EMI the borrower can pay. The longer the tenure, the smaller will be the EMI amount.
What are the factors considered for approving a personal loan?
- Current income of the borrower
- Credit score
- Amount of loan
- Purpose of the loan
- An additional source of income
- Age of the borrower
- The geographical location of the place where the borrower is residing
Is it good to choose the lowest EMI for repaying the loan?
When choosing the lowest EMI for the sake of repaying with less amount, the borrower is adding to the financial burden as the interest is increased. Hence it is recommended to always go for a moderate EMI amount, which is not too low, nor too high.
What is the minimum salary required for a personal loan?
Though each bank’s eligibility criteria in terms of salary differ, individuals who have a monthly income of 25,000 and above can apply for a personal loan. Some banks even lend money to salaried employees of 15,000 per month.
What is the minimum loan amount to be borrowed as a personal loan?
Banks offer personal loans ranging from a minimum amount of 50,000 to a maximum of 1 Crore or above, depending on the borrower’s financial history.
What is the required credit score to be eligible for a personal loan?
The required credit score (CIBIL) is 750 or above. However, if your score is 600-700, you may get the loan approved with a higher interest rate.
Which is the best bank for taking a personal loan?
Compared to other banks, Axis bank is one of the top banks that provide personal loans at affordable rates of interest with flexible EMI payments customized to the borrower’s repayment capacity.