by Introduction
Are you looking to go on a dream vacation or have a destination wedding at a luxurious place, but running short of funds? Or is there a financial emergency you need help with? If so, you can apply for a personal loan at any bank or financial institution. Personal loans are unsecured loans with no restrictions on their intended use. It can be used for a variety of purposes, including an upcoming wedding, medical treatment, travel expenses, home renovation, and educational expenses. We’ve compiled a list of frequently asked questions about personal loans to help you get acquainted with the concept.
How do personal loans work and how do you apply for one?
A personal loan works in the same way that most loans do, except for the collateral submission part. You apply for a loan, submit the required documentation, and the bank evaluates your credit scores, income and other eligibility checks before making a loan offer. If you accept it, the funds are transferred to your bank account and can be used however you see fit. For instance, if you are applying to Karnataka Bank, all Individuals who are residents of India, salaried and aged above 21 years, are eligible to obtain the loan (other terms and conditions apply as per the Bank’spolicies).
What is the benefit of obtaining a personal loan?
Applying for a personal loan is great for the following reasons.
How long does it take to be approved for a personal loan?
The time taken for approval of personal loan can vary depending on several factors, such as your repaying capacity, and the verification process. Typically, applying for a personal loan can take anywhere from a few minutes to a few hours. Some popular banks like Karnataka Bank provide personal loan with complete digital process and instant disbursal* (*subject to the fulfillment of Bank’s or lender’s eligibility criteria and lending policies.)
What is the maximum sum of money that I can borrow from a bank?
The maximum amount that you can borrow from a bank through a personal loan in India depends on your credit score, income, employment type, and other financial obligations.
Are there any advantages to applying for a personal loan online?
Applying for an online personal loan can be done from anywhere and at any time that is convenient for you. You can compare offers from multiple lenders and complete the application process without having to step out from the comfort of your home. This can make it easier to find a loan that meets your needs and make an informed decision. The online application process for a paperless personal loan is typically faster than the traditional process, as you can complete the application and receive the funds within minutes* (*subject to the fulfillment of Bank’s or lender’s eligibility criteria and lending policies.)
Do Personal Loans have any tax benefits?
Personal loan has tax benefits, depending upon the end-use of the funds availed through the loans. Some of these are education costs, purchasing or renovation of house, expansion of business etc.
Can personal loans enhance your credit (score)?
Yes, taking out a personal loan and making timely repayments can help build your credit score. If you make your payments on time and in full, this positive information will be reflected in your credit report and can improve your credit score.
It’s important to keep in mind that other factors, such as your repayment history, credit utilization, and credit mix, also play a role in determining your credit score.
Is pre-payment allowed for personal loans?
Yes, pre-payment of a personal loan is typically allowed by most lenders. Pre-payment refers to the act of paying off a loan before its original maturity date. Many lenders allow personal loan borrowers to make pre-payments with some nominal charges*(*subject to the Bank or lender’s policies.)
Conclusion
Always be mindful that not all lenders can offer same benefits and features for personal loan, and it’s a good idea to carefully compare offers from multiple lenders and research their reputation and track record before choosing a lender. Additionally, you should make sure you read the fine print to understand the terms and conditions of the loan, including the interest rate, fees, and repayment terms, before accepting an offer. Keep your loan at a manageable level and make sure you have a plan for paying it off in full over the life of the loan.
