A personal loan is a financial instrument to avail a loan for unrestricted usage. You get a personal loan without mortgaging any asset. It is an unsecured loan that can be taken without pledging any collateral. A personal loan can be availed at a set rate of interest for a fixed repayment tenure.
Documents required for a personal loan
A personal loan is a collateral-free loan but requires certain documents to ascertain the repayment capacity of the borrower. You need the following documents:
KYC documents that include Identity proof, nationality, age, etc.
Duly filled application form
Continued employment proof/employment certificate
Income proof and salary slip
Additionally, you should have a good CIBIL score. A score below 750 may reduce the chances of availing of the personal loan.
Personal loan EMI calculator
With the EMI calculator, you can calculate the equated monthly installment that you need to pay towards your interest and principal amount over the loan tenure.
If you know your EMI in advance, you can manage your budget conveniently to pay off the loan. You can also choose the right loan tenure.
Pre-payment of personal loans
Pre-payment of a personal loan refers to the payment of a personal loan before the completion of the tenure.
The borrower has to pay pre-payment charges that usually vary between 3% to 5% depending on the lending company.
Always compare not only the interest rate but also the processing charges & pre-payment, and foreclosure charges. Sometimes the company charges a low interest rate but high pre-payment charges or a penalty of foreclosure.