You may require instant funds to tide over your immediate requirements in various scenarios. In such situations, the best solution is to opt for a personal loan instead of a secured loan, as it is more time-consuming. Moreover, personal loans are becoming more and more famous over time, and it is the fastest way of getting an instant loan online For a secured loan, you need to provide a fixed asset or collateral for taking the loan. But, with a personal loan, you don’t need to provide any collateral. The process of applying and getting the money is very fast compared to other loan options. These loans are meant not only to meet the needs but also to meet unexpected financial needs and emergencies such as medical expenses.
Therefore, personal loans are the best option when looking for instant loans online to fulfil your urgent needs. And there are some basic steps you need to follow to apply for a loan. Here in this blog, you will know all the important aspects of personal loans and how you can get the best deal to meet your immediate needs.
What is a Personal Loan?
Personal loans are typically unsecured loans that banks and lending institutions offer to meet any cash requirements. Applying for this loan means you don’t have to produce any collateral. However, lenders check your credit score to evaluate if you can repay the loan without defaulting. Hence, it is vital to have a high score, at least above 750, to get instant loan approval. You can get a personal loan online for many reasons, such as:
- Sudden medical emergencies such as medical treatment, hospital bills, accidents, surgeries, etc
- Travelling expenses to travel to your dream destination
- Expanding or starting your business
- Renovating or upgrading your home
- Wedding expenses include venue selection, catering, interior decoration, and attire.
- Purchasing vehicles like cars, bikes, etc
- Purchasing electronic gadgets and appliances like phones, smart TV, washing machine, etc.
Why Is Credit Score Important For A Personal Loan?
A credit score is a snapshot of your overall financial status, showing your creditworthiness in numerical form ranging from 300 to 900. This score is generated by major credit bureaus such as Equifax, Experian, TransUnion and CRIF High Mark.
Now, you may ask how this credit score impacts your loan eligibility.
The answer is simple; when you apply for a personal loan, the lender checks your score to understand your repayment ability. And if you have a high score above 750, lenders will be ready to offer you loans at comparatively lower interest rates as you are a low-risk borrower, according to the lender. But, if you have a poor score, your credibility will be less as the lender will not trust that you will be able to repay the loan on time. And you are a high-risk borrower, according to the lender. Therefore, you need to check your credit score frequently and take the necessary steps to improve your score.
Also Read: How to Get a Personal Loan with a Bad Credit score?
Benefits Of Getting a Personal Loan
Personal loans are an easily accessible source of funds. And here are a few reasons to justify it:
- No Collateral: The first benefit of getting a personal loan is that you don’t have to submit any asset to get this loan as it is unsecured.
- Multi-Purposes Loan: You can take a personal loan for any reason, such as medical, travel, wedding, business, etc.
- Minimum Documents: When applying for this loan, you must submit documents for your KYC and income verification, such as Aadhar Card, PAN Card, Passport, Voter ID, Income Tax Returns, etc.
- Digital Process: The process of applying for a personal loan is online and paperless. So you don’t have to visit your bank to use it for your loan.
- Instant Loan Disbursal: With the online process, the verification is quick. As a result, your loan amount will be disbursed within 24 to 48 hours.
- Flexible Repayment Tenure: Once you get your loan amount, you can choose the repayment tenure ranging from 6 months to 5 years.
Now, let us look at the required eligibility criteria and documents for a personal loan.
Eligibility Criteria
| Sl.No. | Particulars | Description |
| 1 | Nationality | Indian |
| 2 | Age | 21 to 60 |
| 3 | Employment Status | Employed or Self-Employed |
| 4 | Minimum Income | INR 20,000 per month |
| 5 | Work Experience | Min 1 year completed |
| 6 | Credit Score | Above 750 |
Documents Required
For Salaried Employee:
| Sl. No. | Particulars | Documents required |
| 1 | Proof of Identity | Aadhar Card, PAN Card, Driving License, Passport |
| 2 | Proof of Address | Electricity Bill, Water Bill, Passport |
| 3 | Proof of Income | Salaried: Bank statement for the past six months |
| 4 | Work experience | Employment Certificate for a minimum of 1-year experience |
For Self-Employed:
| Sl. No. | Particulars | Documents required |
| 1 | Proof of Identity | Aadhar Card, PAN Card, Driving License, Passport |
| 2 | Proof of Address | Aadhar Card, Electricity Bill, Water Bill, Passport |
| 3 | Proof of Income | Bank statement for the past three months Salary Slips of three months Income Tax Returns for the last three years Balance Sheet and Profit & Loss Statements for the last three years audited by a CA. |
How To Apply For A Personal Loan Online?
Here are the steps to apply for a personal loan online.
- Visit the official website of the bank you want to apply for a loan.
- Check if you qualify the eligibility criteria and fill in the desired loan amount, tenure, etc.
- Once you meet the eligibility, fill the application with personal and professional details such as email address, employment type, monthly salary, mobile number, etc. and submit the form.
- The KYC verification process takes place for a few hours. Note that your application might get rejected if your information does not match the documents provided.
- Once the verification is completed successfully, your loan amount will instantly be disbursed to your bank account within 24 to 48 hours.
Essential Things To Note Before Applying For A Personal Loan
You must consider these points before applying for a personal loan to get your loan instantly online.
- Eligibility Criteria: Check if you qualify for the eligibility criteria mentioned by your bank before applying for the loan.
- Credit Score: You must score above 750 to qualify for this loan. Moreover, you can get loans with a high credit score at comparatively lower interest rates. So, if you want to know your creditworthiness, you can check your score using Buddy Score, get the credit report instantly, and keep track of your credibility.
- Documents: You must submit minimum valid documents such as Aadhar card, PAN card, passport, voter ID, bank statements, etc. Moreover, suppose you are an existing customer who took out a loan. In that case, the lender will be ready to offer a pre-approved personal loan without documents as they already know your financial status and repayment ability.
- Debt-To-Income Ratio: Lenders check your Debt-To-Income ratio to know if you can manage all your debts with your current income. It also gives them an idea of your loan repayment ability without defaulting. Therefore, ensure that you keep your Debt-To-Income ratio less than or equal to 50%.
- EMI: Plan and budget your loan amount before applying for a loan. You can also calculate the EMI you will be paying monthly and choose the loan amount and tenure accordingly.
Don’t Do This When Applying For A Personal Loan
Hence here are a few things that you should avoid doing when applying for a personal loan:
- Loan Agreement: Never sign the loan agreement form without reading the “Terms And Conditions” to avoid unwanted legal disputes.
- Loan Amount: Plan the loan amount you need according to your budget and calculate the EMI before applying for the loan. By doing this, you can avoid taking loans more than required and debt burden.
- Hard Inquiry: Avoid simultaneously applying for loans at various banks or lending institutions. The reason is that a hard inquiry is reflected in your credit report each time a lender checks your credit score. As a result, it will affect your credit score negatively.
- Loan Purpose: You must clearly understand the purpose of taking a loan amount. If you are not, you might take more than your actual loan budget and ultimately go under debt burden.
Also Read: Apply Instant Personal Loans: A Game-Changer For The Future
In Conclusion
With the tremendous growth in technology and digitalization, personal loans are becoming a boon for those needing instant loans. Moreover, with the online process, you can get this loan without leaving your home, making it easier to access. However, credit score plays a vital role when applying for this loan, indicating your repayment ability. Therefore, checking your credit score using Buddy Score and getting a credit report is best. And, if you want to get personal loans at low-interest rates, you can apply using Buddy Loan and get attractive offers. As it is one of India’s largest loan aggregators, you can get loans from top lenders safely.
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Frequently Asked Questions
Q. Is it safe to use personal loan apps to apply for a personal loan online?
A. Yes, it is safe to use a personal loan app, but you must first verify if the lender is legit before applying for a loan.
Q. Will I get a personal loan even if my credit score is bad?
A. Yes, some lenders offer loans even if you have a poor credit score, but may charge you high interest rates. So to avoid this, it is best to improve your credit score by making timely payments, repaying your past dues and reviewing your credit report once a year regularly.
Q. Can I apply for a personal loan to renovate my home?
A. Yes, you can apply for a personal loan if you are planning to renovate your home instead of using your savings.
