You are not required to provide any collateral or security while taking the personal loan. And that is the reason why personal loan interest rates charged by banks, NBFCs, and DSAs are higher than that of the gold loan or house loan.

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An instant personal loan can be helpful to you when you are short of funds in an emergency where you require money as soon as possible.

Following are some of the things you need to know.

Know about the institutions from where you can avail of a personal loan

While you can approach your relatives or friends to take a personal loan, lending institutions like banks, NBFCs, and digital lenders like PaySense offer personal loans in a structured, on-tap way. Apart from different banks, NBFCs and DSAs provide personal loans and instant personal loans in India.

What are the fixed and floating interest rates

While taking a personal loan, you must check with your lender if the interest rate offered is fixed or floating. If the interest rate is fixed, any changes in the bank's MCLR won’t impact your EMI amount.

What is the maximum and minimum amount of personal loan you can avail

The maximum and minimum amount of loan that you can take varies from lender to lender. You can get personal loans from Rs 75,000 to Rs 25 lakh from many banks.

Also, generally the issuance of personal loan for salaried employees is of a higher amount than a personal loan for self-employed individuals.

Tenure for which you can take a personal loan

A personal loan is offered generally for a maximum of five years by lending institutions like banks, NBFCs, and DSAs. Nevertheless, the tenure may vary from lender to lender.

Know about the charges associated with a personal loan

When you avail of a personal loan, the bank, NBFC, or digital lender levy certain charges like stamp duty, processing fees, other statutory charges, etc. The personal loan charges vary from lender to lender. Again, a lender may also levy pre-payment or pre-closure charges.

So, before taking a personal loan from any lender, check the fine print for different types of charges leviable upon you.

What are the eligibility requirements to apply for a personal loan

The eligibility requirements for getting a personal loan vary from one lender to another. Below are some of the eligibility requirements:

  • Your minimum monthly income should be Rs 15,000
  • Your credit must be above a certain pre-set level

Your credit score plays an essential role in determining your eligibility to get a personal loan and the interest rate you would be charged.

Factors to keep in mind to avail of a personal loan at low-interest rates

Personal loans are unsecured loans, so lenders consider several different factors before sanctioning a loan and offering low-interest rates.

Below are some of the factors you must keep in mind to get a personal loan at low-interest rates:

  • Maintain a good credit score: The lenders decide your loan amount, interest rate, and other loan terms majorly based on your credit score. Your credit score shows your dependability of paying back the loan. So, you can get the best personal loan interest rates when you maintain a high credit score. You can even negotiate with your lender for an even better interest rate.
  • Apply for a loan amount inside the limit that you are eligible for: When you apply for a loan amount higher than that of your eligibility, it may lead to rejection of your loan application. So, you must check the eligibility of a particular loan amount before applying for it with your lender.
  • Check for interest rates for various loan tenure: Lenders may offer different interest rates for different terms. For example, for a small tenure, your interest rate will mostly be lower.
  • Avoid multiple loan application: Many loan applications with different lenders will get recorded in your CIBIL report. This can hurt your chances of getting a personal loan at a better interest rate as your credit score plunges.
  • Compare interest rates for various loan amounts: Many lenders offer a low-interest rate at a higher loan amount.

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In conclusion

Thus, while taking a personal loan, you must be abreast of details like above. By knowing about personal loans and factors affecting your personal loan interest rate, you can make an informed decision in choosing the best lender for taking a personal loan.

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