A personal loan is a versatile credit option. It is a widely used financial product by individuals as it can satisfy any personal or professional financial need and help borrowers overcome a sudden financial crunch or attain a planned motive.
A report by TransUnion CIBIL indicates that individuals in the age group 26-41 years marked the bulk of small loans. Depending on the lending institution, one can apply for a Small Personal Loan of up to Rs. 25 lakh.
Why a Small Personal Loan is a Viable Funding Option?
The following are the four key factors that make a personal loan a useful borrowing option:
- Get Small Personal Loans Online with Minimal Documentation
Earlier, the personal loan application process was cumbersome as borrowers had to comply with burdensome documentation. This made it a complex and lengthy process. Now, leveraging technology, lending institutions have made the application process completely online. It is a 100% digital process with a video KYC (Know Your Customer) where loan applicants can save time and effort. There is no need to physically visit the lending institution’s branch to check the personal loan eligibility or apply for the loan.
You can easily apply for an instant small personal loan using a laptop or mobile. Whether at home, office or travelling, you can fill out an online loan application using a mobile application in a few steps. You can also submit soft copies of the documents. Submit can complete a personal loan application with all the necessary documents within a few minutes.
- No Collateral Required
Also, get a loan without pledging any asset, thanks to personal loans. Generally, loans are offered against collateral as it guarantees that the borrower will repay the borrowed money following the agreed terms. You just need to complete an online application with the supporting documents. Since lenders offer funds without collateral, they need borrowers to have a good credit history and credit score. A high credit score shows the creditworthiness of the borrower. Credit bureaus assign these credit scores after considering various factors concerning the borrower’s financial profile.
- Flexible Repayment Tenure
Financial institutions understand that applicants need to accomplish their personal financial goals that can not be timed; hence, they offer flexible repayment tenure from 12-60 months. A flexible repayment tenure allows you to repay the loan at your convenience. You can apply for a loan with a suitable repayment tenure considering their cash flow. To save on interest costs, apply for a shorter-term loan and repay the loan sooner.
- No End-use Restriction
A personal loan serves varied purposes. There is no restriction to the end-use of a personal loan. Whether you want to replace that old furniture, remodel your kitchen, need new fixtures and fittings to spice things up a bit, or change electrical wiring, there is no need to delay important tasks to the next salary credit. Also, you are not required to spend your savings or break your fixed deposits. You can apply for a small personal loan at nominal interest rates.
Eligibility Criteria for a Small Personal Loan
An Indian citizen can apply for a personal loan online if they meet the following eligibility conditions:
- The CIBIL score of 750 or more.
- For a salaried employee, the age limit is 21-65 years.
- The salary requirement for Mumbai and Delhi residents is Rs.25,000, and for other cities, it is Rs.20,000. You should have a total work experience of a minimum of one year and six months experience in the current organisation.
- For the self-employed, the age limit is 25-60 years. The age of the business should be at least three years.
Lenders offer an eligibility checker on their websites to check personal loan eligibility.
Documents Required for a Small Personal Loan
The documents required are as follows:
- Identity Proof
- Residence Proof
- Bank statements for the previous six months
- Salary slips for the past three months and ITR or Form 16 (for salaried persons)
- Business proof, Income Tax Return Acknowledgement Copy, and balance sheet for the past two years (for self-employed)
In short, you can take small personal loans online to meet various financial requirements. Use a personal loan EMI calculator to determine the appropriate amount you can take as per your repayment capabilities, monthly obligations, potential raises in income, and expenses.