All You Need to Know About Personal Loan

If you ever thought of purchasing a car or a house or something which requires a large amount of money, you have definitely considered applying for a loan. Weather you have the sufficient money at the time or not you can get a loan if you meet the eligibility.

Basically loan is a specific amount borrowed from an authorized finance authority. Then an amount in a form of installment including interest percentage is given back for a fixed period of time.

Loans can be used in many scenarios. Below are the some expenses for which you can consider applying for a loan:

• 1. Pursuing Higher Education

• 2. Purchasing of a Vehicle

• 3. Purchasing of Home or Accommodation

• 4. Renovation

• 5. Marriage

• 6. Medical Treatment

Apart from the above options one can pursue loan for its other personal needs like purchasing an expensive gadget or to start his own business. The opportunities are unlimited.

Most of the banks in India provide loans at attractive interest rates. These rates are pretty lower than interest rates of the credit card. This factor makes the individual to get loan instead to pay through the credit card for an expensive thing which could be a car for example.

A loan functions on different factors e.g. If you get a loan of Rs.1 lakh at 12% interest for 2 years, the total amount paid by you is Rs.1,12,968. This amount is calculated by the EMIs (Equated Monthly Installments) you will pay for 2 years, which is Rs.4707 at 12% interest on principal amount. Below table will make you understand this easily:

Loan Amount

1,00,000

Interest

12%

Term

2 Years

Monthly EMI

4707

Total Loan repay amount

1,12,968

Here loan amount is Principal amount which you get. It will decrease when you pay your EMIs which are small amounts you need to pay every month till the term ends. Term is the time you get to repay the amount back with interest. Interests are set by the entity from which you are borrowing the loan.

Today getting a personal loan is quite easy and less troublesome. Although different banks and finance authorities have their own criteria, most of them have identical eligibility requirements:

1. 1. Should be salaried individual working in private, government firm or self employed.

2. 2. Age should be 21 to 60 years.

3. 3. Minimum salary is determined from state to state. However a salary of Rs.25,000 is mandatory.

4. 4. Bank statement of 3 months.

5. 5. CIBIL score should be more than 650

If you meet all the above criteria than there is no worries as you are eligible for personal loan.

Average interest on loans can be in a range of 10% to 15% even more depending on the entity. Also keep a note that there are other charges except interest rate which you should consider before choosing a personal. Other charges like processing fee, late payment and preclosure charge can include a healthy part of the money.

It is advised to always take a personal loan in case of emergency situations. And if you have to then try to repay the loan amount in 9 to 18 months as it will hugely reduce the total repay amount. You should also be very responsible when you get a loan, avoid misusing the credit as it may result in permanent ban from loan application. Vijay Malya is a good example which you should consider before misusing the loan given.

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