Golden rules to follow when taking a loan

Personal loans are those which are taken to serve some immediate purpose. There are lot of banks in India which give personal loans. You will need to compare various factors like EMI, interest, loan amount etc to choose the best place to get your personal loan. It requires no collateral, but you will require submitting a number of documents. Large amounts can be taken as personal loans. In general, it has to be paid back within five years.

A personal loan is taken to serve some personal ends. It does not require any collateral and the money can be used to serve any personal ends. Often, the money is used for a wedding, to organize a holiday or to buy consumer durable goods. There are around 10 banks in India that offer personal loans to you without any security.

Advantages of personal loans

If you have a big cash commitment, then personal loans are the best way to go. The various advantages of personal loans are as follows:
  • You need not supply any security or collateral.
  • Large amounts are available as loans. The amount of personal loans in India ranges between Rs. 50000 and Rs. 30 lakhs.
  • The process is extremely simple and fast. Most personal loans are disbursed within a week. You require furnishing simple and easy documents only.
  • There are no questions asked regarding the end use of the money. The bank is not concerned what you use the money for. It is only concerned with your ability to pay back the loan.

  • Things to do before applying for a personal loan

    The actual process of taking out a personal loan is quite easy and fast. However, if you want the process to go smoothly without hitch, there are a number of preparations that you can complete beforehand. Most of these include getting the required documents in order. These preparations are as follows:

    Gather the relevant information stated above from the internet as well as your local area branches. You can then compare them at home to choose the best. When you go out to apply for the loan, you will be well prepared and need not waste any time.

    Find out what documents are needed and get them in order. All banks require an identity proof, preferably a photo ID. Get a photocopy of PAN card, driving license, passport or photo credit card. In the last case, the card should be current and you will also need to submit the statement for the last two months. You will also need to furnish any one of the above documents as your age proof.

    Prepare an address proof with current address. Any one of the above documents will do. Apart from these, you can also submit utility bills, rental agreement or title deed of property as address proof. You need to submit an income certificate. You can submit your current salary slip.

    Most banks will require a job continuity proof. You can provide Form 16 or a relieving letter or an appointment letter for last two months. If you are self employed, you may need to submit a profit and loss statement, balance sheet or partnership deed as proof of income. You have to submit a document like account statement or photocopy of passbook as proof of your banking history.