About Personal Loan

A PL is an unsecured Loan to meet immediate needs like medical, travel, eudcation etc.ROI depends on Credit score, Income and employment type.
Personal loans acts as an affordable alternative to credit cards and help finance life's big purchases.
Personal Loan Terms
1. Principal
The amount borrowed is called as principal. For example, if one apply for a personal loan of Rs. 100,000 that amount is the principal.
2. Interest
Interest is charged on the outstanding principal.hence in India PL is calculated on reducing method. A few financial institutions may charge on flat method.
3. Reducing Rate of Interest
Every month a borrower pays an equated monthly installment. The installment carries a principal and an interest component. With every EMI principal gets reduced and the emi is calculated on reduced principle hence it is called reducing method.
4. Flat Rate of Interest
In this type the interest is calculated always on the initial principle amount. The flat ROI are generally expressed as less than Reducing rates. One should be aware of this before taking a personal loan.
5. EMI
Equated Monthly Installment. It is the fixed amount that one pay on a fixed date every month.
6. Annual Percentage Rates or APR
APR is the maximum rate that a bank or financial installment charge on a personal loan taken . It generally varies from 11%* to 36%*
7.Eligibility
People who are salaried or professional like Doctors and Chartered accountants are considered for PL. People working in companies categorized by banks and NBFC as listed like A, B, C , super etc are given preferences. Better the categorization lesser the rate.
People working in Pvt. Limited companies , MNCs and Govt or PSU sectors are first choice for a bank for PL. People working in partnership companies and proprietorship companies may be considered but if some special conditions are met.
8.Processing fee
The processing fees are generally deducted from the loan amount only. No bank charges PF in advance. PF varies from 1% to 5% from company to company. The PF also contains GST. So if Rs 1000 is PF than 18% GST will be added to it and Rs 1180 will be charged
9.Foreclosure
Banks generally allows borrower to close the loan before the tenure is over , after payment of 6 months to 12 months emi. This rule varies from bank to bank and one need to check with the bank before applying.
10.Partpayment
Part payment is not allowed by most of the banks but few new age banks are also allowing part payment . Please check before applying.
11. Tenure
The tenure for a PL varies from 12 Months to 60 Months , some banks also provide loan upto 72 Months.
11.Financial Institutions
For a personal loan one can avail loan from Banks, NBFCs and Fintech Companies.
12.Things to consider before availing a PL.
a) Whether the lending institution is a Bank , RBI registered NBFC or Fintech company. Any companies which is not registered with RBI we advice not to take a loan from it.
b) Whether the ROI is charged on reducing or Flat rate of Interest.
c) Processing fee
d) Whether insurance is deducted from the principal amount . Do check with the lender before taking insurance regarding the scope of coverage.
13.Documents
a) PAN CARD
b) ADHAAR CARD BOTH SIDES
c) PHOTOGRAPH
d) 3 Months Salary SLips
e) 6 Months bank statement of salary accountants
f) Form 16 1 Year for Govt employees