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What Is the Eligibility and Requirement for a Personal Loan?
Personal loans often emerge as saviours to address planned and emergency expenses. What makes them even more preferable is the quick disbursal and the fact that no collateral is needed. But how exactly is your eligibility for a personal loan assessed?
Here is a lowdown on personal loan, including eligibility and documents required, and the benefits it brings along.
Understanding Personal Loan
A Personal Loan is a type of collateral-free loan that is preferred by many, especially the big-ticket ones. It can be taken from a bank or non-banking financial company (NBFC) to meet personal monetary needs like higher education, child’s education, marriage, or even medical contingencies.
Personal loans are provided on the basis of key criteria such as income level, credit worthiness, employment history, monthly income, etc. However, it does not require the borrower to provide collateral like property or gold to avail the same.
While the interest rates are higher on personal loans, a good credit worth along with a high and stable income enables you to avail the same at a competitive rate of interest.
Personal Loan Eligibility
Eligibility for personal loans varies from bank to bank. However, the general criteria related to age, income, profession, repayment capability, etc. remains the same or may have slight variations.
One needs to be sure about the eligibility to apply with the chosen bank before commencing with the paperwork. The general personal loan eligibility is stated as under.
The borrower should be a minimum of 18 and a maximum of 60 years of age to apply for a personal loan
Both salaried and self employed individuals are eligible to apply for a personal loan
Salaried individuals with a monthly income of INR 25,000 can apply for personal loans
Self-employed individuals applying for personal loans will have to provide proof of stable monthly income
It may be noted that one cannot apply for a personal loan without income proof. However, one can avail the same with a co-borrower such as a family member or friend with a stable income
While an unsecured type of loan, personal loan without income proof can be availed with 100% collateral
This collateral can be in the form of fixed deposit, policies, shares, national savings certificate, or any other tangible or government securities
Most of the financial institutions prefer salaried employees for personal loans because of their stable income
Employees of private limited companies and public sector undertakings, including central, state and local bodies can apply for personal loans
One can avail a personal loan of up INR 40 lakhs, however, the amount may vary based on the income
The repayment tenure for both salaried and self-employed applying for personal loans ranges between 12 months to 60 months
Documents Required For Personal Loan
There are certain documents that both salaried and self-employed individuals need to produce along with the loan application. These documents for personal loans are proof of eligibility against the set criteria, hence carefully scrutinized at the time of approval.
Income proof (salary slip or bank statement for last 3 months for salaried employees and previous year ITR/P&L Statement and balance sheet for self-employed)
Identification proof (copy of passport, Voter ID, PAN card, Aadhar card, driving license)
Address proof (copy of passport, Voter ID, PAN card, Aadhar card, driving license, utility bills)
Bank statement or copy of passbook for last 3-6 months depending on the respective bank’s eligibility criteria
Business proof (Certificate of practice/partnership deed/GST registration and filing documents/MOA & AOA/ Shop Act License)
Current dated salary certificate along with the latest Form 16
Two latest passport size photographs
Besides these, some banks may also require additional documents for personal loans. Hence, check all the details carefully prior to filing the application.
Personal Loan Features and Benefits
Various loan schemes are earmarked for specific purchases. However, a personal loan can be used for anything. This, in turn, makes it a preferred choice among borrowers. Besides, there are other features and benefits of personal loans that are explained below.
Besides the flexibility of usage, personal loan schemes come with a flexible tenure period ranging from 12 months to 60 months. Meaning that neither is there a restriction on how to spend the money nor is there a hurry to repay the loan amount. Simply convert your loan amount into affordable EMIs and gradually repay the same until the set tenure.
The scary part of applying for loans is arranging for collateral. But need not worry as personal loans have your back. The loan is approved based on the loan applicant’s creditworthiness, income, employer/business reputation, repayment capacity, etc.
- Quick disbursement
A personal loan is known for its instant approval, thanks to minimal documentation and easy application. Simply select the desired product, keep the right documents handy, set the amount and loan tenure based on the eligibility and get the loan amount instantly disbursed without any hassle.
- Easy Documentation
The paperwork and processing time required when applying for a personal loan is comparatively lower than other loan schemes. Muthoot Finance offers instant loan disbursal on Aadhaar card or with 100% collateral when applying personal loan without documents for salary/income proof.
If you need immediate funds to cater to your financial needs, a personal loan is the answer. Visit your Muthoot Finance nearest branch for a hassle-free application process and instant loan disbursement at highly attractive interest rates.
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