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What is Personal Loans ? |
A personal loan is an unsecured loan. That means you don't have to put up any collateral, as with a car loan or a home loan, where the underlying asset is mortgaged with the lender. Normally, the lender does not ask for guarantors either. More advantages: minimum documentation and speedy clearance (within three to seven days of applying). And there is no monitoring of ‘end use’ -- you can use the loan for any purpose you like. But you’ve tried applying for a personal loan, you’ve probably been told all this before. What you weren’t told: although this loan is generally an unsecured product, some banks do ask for collateral and guarantors. So the form of the product across the industry is by no means standard. Expect variation in the terms and conditions as well as the eligibility conditions across different lenders.
Loan eligibility depends upon various factors. The main factor is your ability to repay. The bank would like that the installment you pay should not exceed more than 30 to 40% of your net salary. Apart from that your profile in terms of residence and the place of your work also matter. You should be in the managerial cadre and residing in a location approved by the bank. Sometimes if you reside in a chawl or at places termed negative by the bank, your loan approval becomes very difficult.
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