A personal loan can be used for any type of expense Which can be big ticket appliance purchases or home renovations to luxury vacations and debt consolidation. In other cases personal loan can be used for payment to unexpected medical bills, investment in business, fixing your car, down payment of new house and much more all depends on your needs.
What is the tenure of a personal loan?
Personal loan Time frame Start from 1 year to 5 years or 12 to 60 months. In rare cases, shorter or longer personal loan tenures may be allowed by the borrower on a case by case basis.
What is the maximum loan amount I can borrow?
When calculating the maximum personal loan amount in case of salaried people, the bank/financial institution takes care that the EMI does not exceed 30% to40% of the applicant's take home salary. Any existing loans that are being serviced by the applicant are also considered when calculating the personal loan amount. And, for the self employed, the loan value is determined on the basis of the profit earned as per the most recent acknowledged Profit/Loss statement, while taking into account any additional liabilities (such as current loans for business etc.) that the applicant might have.
Which are the best banks and NBFCs for a personal loan?
Leading provider of personal loans include HDFC Bank, IndusInd Bank, Citibank, Axis Bank, Fullerton India, Capital First, State Bank of India and Associates, Indian Bank, Karnataka Bank, Standard Chartered Bank and many others.
How is the personal loan payout?
Once your personal loan get approved, you may either receive an account payee cheque/draft equal to the loan amount or get the money deposited automatically into your savings account electronically.
Who are eligible for personal loan?
Person Who is applying for loan, Should have a regular source of income whether you are a salaried individual, self-employed business person or a professional. A person's eligibility is also affected by the company he/she is employed with, his/her credit history his/her residential location and other factors as per the lender's criteria.
Is there a minimum personal loan amount that I need to borrow?
Yes. Minimum personal loan amount Can vary from one lending institution to another, most lenders have set their minimum personal loan principal amount at Rs. 30,000 or it could be changed, You need to clarify during paperwork or on call.
Can I apply for a personal loan jointly with spouse or Parents?
Yes, personal loan can be applied either by yourself (single) or together with a co-applicant (jointly).The co-applicant needs to be a family member like your spouse or parents.
Are there any tax benefits associated with personal loan?
Personal loans usually have no tax benefits, however, in case you take a personal loan for home renovations/down payment, you may be eligible for income tax deduction under section 24. However, this tax benefit is limited to only the interest on the loan and not the principal amount. Also you would have to furnish proper receipts to claim deduction.
What is the difference between Part payment, Pre-payment and Pre-closure? Are there any charges related to this?
Part Payment: A part-payment amount is less than the full loan principal amount and this payment is made before the loan amount becomes due. Pre-Payment: This occurs when you pay off your personal loan in part before it becomes due as per the EMI schedule. The pre-payment amount may or may not be equal to the total due amount. Pre-payment charges usually range from 2% to 5% of outstanding loan amount. Additionally, banks do not allow pre-payment/pre-closure of personal loan before a specified number of EMI payments have been completed. Pre-closure: Pre-closure refers to completely paying off a personal loan before the loan tenure has ended. Just like pre-payment charge, pre-closure charges range from 2% to 5% of the loan amount.
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