5 Important Things To Know Before You Apply for the Best Personal Loan

A personal loan is an unsecured form of credit provided by banks and other financial institutions. People usually apply for a personal loan in the wake of unexpected or unforeseen expenses or to meet short-term planned requirements like travel and quick purchases - a trend that is becoming increasingly popular in recent times. Some individuals also apply for a personal loan while purchasing a significant asset like a car or home loan.

What is a Personal Loan?

A personal loan is a loan that does not require collateral or security and usually comes with minimal documentation. You can utilise the funds from this loan for any legitimate financial need like any other loan; you need to repay it according to the agreed terms and conditions with the bank. Factors like your income level, repayment capacity, employment history and profession determine whether you can receive a loan.

Before applying for the best personal loan, let’s walk through the five essential things to know.

1) Evaluate Your Needs Before Taking out the Loan

Evaluating costs and requirements for a personal loan is the crucial step before applying for a loan. A personal loan is a financial commitment for interest and monthly payments, including the processing fee. For example, EMI, and interest payments, amongst others, before deciding upon an amount.

2) Maintain a Good Credit Score

When you apply for a personal loan, a credit report is one of the first things you will be required to obtain. You can request credit reports from any Reserve Bank of India licence bureaus. A credit report is your credit score when it informs the bank or lending institution whether you are eligible for a loan or not.

3) Check the Eligibility Criteria

The personal loan eligibility criteria vary from lender to lender, including occupation, age, and income; before you apply for a loan, check with your bank or lending institution about your eligibility. Most lenders require the borrower's age to be between 21 and 55 years and, in some cases, between 18 and 60 years.

4) Check the Additional Cost

It is crucial to remember that the cost of taking out a loan is not limited to EMI and interest payments.  There are numerous other costs, including prepayment fee, processing fee, and late payment fee, which also add to the overall price. Therefore, before signing the loan document, read the terms and conditions carefully to assess the feasibility better.

5) Check the Repayment Plan

Always check the repayment plan before opting out of the loan. This includes monthly expenses and EMI. Personal Loan EMI Calculator will help you manage and plan your finances better. For example, personal loans offered by banks have better tenure selection.

Which Bank is Best for Taking a Personal Loan in India?

Well, there are many banks in India for taking personal loans. IDFC FIRST Bank provides personal loans upto 1 Cr with attractive interest needs. It allows flexibility to make up to 40% of part payments. In addition, it also has a top-up facility through which you can avail top-up loan on your ongoing loan. It allows you to transfer your existing personal loan/credit card and enjoy attractive benefits, including flexible loan tenure from 6 to 60 months.

What are the Documents Required to Apply for a Personal Loan?

You need valid KYC, three months' bank statements, Net banking, or Debit card details to set up e- Mandate, e-Signature/stamp for faster disbursal. Just Upload these documents and receive your loan amount in your account seamlessly.

How Long Does it Take to Get Approved for a Personal Loan?

When you apply for a personal loan, the lender will ask for documents to verify your identity and monthly cash flow. Generally it will take only 2-3 days to get money in your account. IDFC FIRST Bank ensures that you get the loan as soon as possible if your documents are duly in place and clear.