A personal loan is often used to offset additional personal expenses like covering the cost of a wedding, renovating your home, or paying emergency hospital expenses. It can be of two types: secured and unsecured. A secured personal loan requires the applicant to offer some sort of collateral in order to obtain it. An unsecured loan doesn’t require any collateral while applying for the loan. With this type of loan, you usually get a lump sum amount that you have to pay back over a period of time. Personal loan interest rates and other terms vary from one lender to another. So, in the event you’re looking for some extra cash, you can always follow the steps below.
Steps to Apply for a Personal Loan
Step 1: Log on to the bank or financial institution you want to apply to for your personal loan. Click on the relevant link and fill up the form with the details required.
Step 2: Submit the relevant documentation mentioned on the screen. Make sure you keep all essential documents handy to ensure quick submission.
Step 3: Once you submit all the information, the lender will go through a verification process to check if all your documents are valid and that all the information you’ve provided is correct. This also includes a background check and credit history check.
Step 4: If the insurer finds that everything is in order, your loan will be approved. The document with the terms and conditions (e.g.: interest rate, payment period, total loan period, etc.) will be sent to you to acknowledge and agree to.
What Documents Will You Need for This Application?
Applying for a personal loan requires a few essential documents. Below is a list of all the documents you need to keep handy.
- Identity proof with photo (Aadhar card, passport, voter ID, driving license)
- Proof of income (A copy of your bank statements from the last six months, salary slips, Income tax documentation)
- Address proof (documentation with home address or house registration documents)
- Passport size photographs (scanned for online application)
- PAN card
What to keep in Mind While Applying for a Personal Loan?
Numerous institutions offer a personal loan, but which one should you choose? Ask the following questions before you choose which personal loan to apply for:
- What is a personal loan interest rate?
- What are the extra fees and charges to be paid with the loan?
- What are the terms of repayment?
- What is the timeline of repayment, and does it suit your situation?
- Are there any collateral requirements for the loan?
- What happens if I can’t repay the loan? What are my options?
Answering these questions will help you understand what your requirements and situation are to enable you to choose the perfect loan for you.
How Much Will You Pay?
A great resource to use while borrowing personal loans is a personal loan EMI calculator. This important tool can help you make an informed decision. The EMI calculator will allow you to see the monthly payments you will need to make to repay the loan amount. This is essential while comparing the interest rates, as it allows you to gauge your loan payment each month. All you need to do is enter the loan amount, the interest rate, and the duration of the loan in order to get the monthly payments you will be paying.
With these steps and the other relevant details, your process to avail of a personal loan will be easy and breezy!