What You Should Know Before Applying For a Personal Loan

In every aspect of our lives we need money to meet our needs. Apart from our hard earned salaries, the other most preferred source of money is acquiring personal loans. Personal loans are different from business loans; they are issued to individuals rather than to organizations as is in the case of business loans. Before you apply for a loan you must first confirm your eligibility for a loan. Sources of these loans include commercial banks, micro finance societies and co-operative societies, with commercial banks being the highest lenders of personal loans.

Before you decide to finance you activities using a personal loan, you should know the personal loan interest rates. The interest charged on loans should be within your repayment capabilities. Personal loan interest rates are lower than those of business loans, but these loans pose a lot of challenge to the borrowers in terms of the highest amount of loan one can be issued with. Personal loan interest rates vary according to the amount at stake and the repayment period. The period of a loan is short probably not more than three years. Your ability to repay the loan and the monthly instalments decides the rate, the current lending rate range from 9 to 28%. For large amount of money paid over a long period of time, the interest paid can be negotiated with the lender institution.

Personal loans are meant for self-employed professional individuals, salaries individuals and self -employed non professionals. Your eligibility for a loan depends on several factors. Your residence and current occupation are taken into consideration by the bank. You must also be earning a minimum of Rs. 8000 each month, be at least 21 years of age and not exceeding 60 years.

Personal loans don't need securities, it's a unsecured loan and you don't need guarantors, but some banks do ask for securities. It is possible to co-apply with your spouse as it increases your eligibility for a larger amount then would have on your own. Before you apply for a personal loan, make sure that the interest rates remain constant or reduce as you make monthly instalments. In Delhi, personal loans are acquired from nationalized, foreign and co-operative banks. A charge ranging from 2-3% of the loan is levied when the loan is applied; a processing charge is also levied on the loan.

If you are considering getting a personal loan, walk into several banks or consult a financial advisor to seek clarified information before making your decision.

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Monika Sen

Like to research and write on finance, education, gadgets. Meeting new people, travelling and reading. (show bio)