There are several good reasons for getting a personal loan. They can provide the funds quickly in case of an emergency, like hospital bills or home renovations, and for those events that you have been awaiting, like wedding, foreign trips, or higher studies. No wonder, personal loans accounted for 28% of total bank credit between 2019 and 2020, according to data published by the Reserve Bank of India (RBI).
Personal loans have been growing in popularity. In fact, they grew at a phenomenal pace of 133.9% in the third quarter of 2019, with the continued spike in consumer demand. To fully reap the benefits, it is important to know how to get the best personal loan at the lowest interest rate. The best option is one that suits your requirements. Here are five things to look for when seeking the best personal loan.
1. Easy Documentation
Before you apply for a personal loan, make sure it can be obtained with minimum hiccups. For this, look for a lender who requires only the following simple documents:
- PAN/Form 60
- Address proof, including a valid passport, voter’s identity card, driving license, aadhaar card, or National Population Register
- Additional address proof like rent agreement or pension payment orders
- Income proof like salary slips and bank statements
Minimal documentation and paperwork can make the process smooth and stress-free.
2. Loan Interest Rates
Work with a bank that offers reducing interest rates on your loan. This means, as the outstanding principal amount reduces, the interest payable is also lowered. Further, work with a bank that offers rates starting from as low as 10.75% for loan amounts from ₹1 lakh to ₹40 lakhs. Low interest personal loans improve your buying power and bring down the timeframe to clear the debt.
3. Simply Eligibility
Apart from your credit score and existing borrowings, the best bank for a personal loan will have the below easy eligibility criteria.
- For self-employed individuals, the minimum and maximum age should be 28 years and 68 years at maturity, respectively. For salaried individuals, the minimum and maximum age should be 23 years to 58 years at maturity.
- For self-employed individuals, the business must be in existence for at least 3 years. For salaried individuals, income proof is needed with self-attested copies of relevant documents. The minimum NTH should be ₹20,000 per month.
You can use a personal loan eligibility calculator to know if you qualify for the same.
4. Flexible Tenure
Choose a loan that allows tenure flexibility. You should be able to pick from as low as one year to seven years. In fact, the EMI amount will also depend on the timeline. The longer the tenure, the lower is the EMI.
5. Easy Application Procedure
Check whether the application process for the lowest interest rate personal loan is simple and convenient. Borrowers must be able to apply online by filling a form for instant loans. This should not take more than a few seconds.
6. Associated Fees
Besides eligibility and interest rates, check the loan cancellation charges, processing fees, late payment penalties, and service tax amounts. Being mindful of these can keep you from paying additional charges later.
Ticking off these factors can help you get the perfect loan for your current requirements. Research online and talk to a financial expert for the right guidance.