What is a Personal Loan?:
Personal Loans, by definition, are unsecured loans forwarded to an individual by a financial institution. Some of the typical reasons for availing Personal Loans are debt securitization, renovation of homes, meeting expenses for weddings, unexpected medical expenses, etc.
Like all other loan products, the lending institution makes a one-time disbursement of the loan amount to the borrower. The borrower needs to repay the loan with interest through monthly installments over the term of the loan.
With the growth of consumerism, the demand for Personal Loans has seen an incremental demand. Almost all the banks and non-banking financial companies have Personal Loans as a part of their offering.
However, it is to be noted that lenders will apply due diligence before sanctioning the loan to you. The basic parameters that go in this study are your age, creditworthiness, and income. Depending on their findings, the lending institutions are within their rights to either sanction or reject your loan application.
Personal Loans Eligibility Factors:
As a prospective borrower of Personal Loans, you need to fulfill the following eligibility criteria:
- The minimum age should be 21 years.
- The maximum age cannot be more than 60 years at the time of maturity of the loan term.
- You have to be working for a public or private company
- The lowest acceptable salary should be Rs. 15,000/- per month
Besides the factors mentioned above, the most crucial determinant for the lender to advance the loan is your creditworthiness. A healthy score on CIBIL may prove the same. A score hovering between 720 to 750 is considered to be acceptable by most lenders.
If you are contemplating a Personal Loan, it is wise to check the personal loan interest rates beforehand. This will help you in budgeting your monthly expenses. End of the day, the monthly installments that you need to service will be out of your income. A miscalculation may lead to an imbalance and subsequent delinquency.
To aid you in your decision-making regarding Personal Loans, all the lending institutions and financial advisors have put up Personal Loan EMI Calculators on their official websites.
How Does A Personal Loan EMI Calculator Work?
The EMI calculator works straightforwardly. All you need to enter is the desired loan amount, rate of interest, and the loan tenor. The monthly installment figure will show up immediately. The embedded flexibility allows you to enter loan tenors from 12 months to 60 months.
After the EMI figure is displayed, you may fine-tune the same by changing any of the three determinants. If you want to reduce the EMI, you may increase the loan term or lower the loan amount.
Age of the borrower is an important component in Personal Loans. If you are young, you may opt for a repayment term, therefore, have the additional flexibility to gt more loans at affordable EMI. Also, it may be construed by the lender that, for a young borrower like you, the scope of earning more in the future goes up, which will work in your favor while judging your application.
Another comfort factor that works in favor of a young borrower like you is that you may need a lesser amount of loan compared to a person of advanced age. The needs at a young age are generally not so high, whereas requirements for an older person change with added responsibilities that come with age.
However, you should be prudent while applying for a Personal Loan. It should not turn out to be a burden for you. Misused loans can turn into a debt trap. Some of the thumb rules for the same will be not to splurge with the borrowed money. You should strictly utilize the borrowed fund for the purpose which has necessitated the same.