Questions to ask before applying for personal loan

Personal loan is unsecured loan from bank and financial institution. Personal loan can be availed by submitting the document for KYC and monthly income statement.  Personal loan is popular loan in india.  Because it is easy to get with minimal documentation.  Loan tenure from 12 to 60 months with interest of 11% to 24% interest per annum.  SBI, HDFC, Citi bank, Axis bank, Kotak bank, Yes bank, ICICI and many more banks offer personal loan to salaried employees or self-employed\doctors by providing monthly income statements.

Basic criteria for personal loan.:

Age : 23 – 55 years
Monthly income : Minimum 20000 rupees monthly.
Total years in Job: 2 years.
Documents : Document for KYC, PAN card and monthly income statements or income tax statements.

Check list before apply:

Go for a personal loan amount that you actually need and not more than that. Personal loan is not interest-free loan, the interest rate is 12% to 24% per annum. Personal loans are the most expensive financial product in the market next to credit cards.

Negotiate interest rates. If your credit score is more than 750 and your salary account with the bank, you can negotiate the personal loan interest rates.

Negotiate the interest rates.

Loan processing fees is between 0% to 4% for the personal loan. Citi bank charges no processing fees. SBI collects 1% fees for processing. But ICICI loan Processing Fee is 2.25% per annum. Check for minimal processing fees.

Check the loan prepayment charges for the personal loan. Prepayment of the loan is closing the loan in advance. Few bank charges no penalty for prepayment or pre-closure for the personal loan. Axis bank and citi bank charges no fees for pre payment. But SBI charges the prepayment charges of 3% on prepaid amount. Check for the personal loan which provides zero fees on pre payment. This way we can close the loan earlier with no extra cost.

Check for the personal loan which provides zero fees on pre payment. This way we can close the loan earlier with no extra cost.

Part Prepayment is paying the part or minimum amount to the personal loan in advance. It would encourage us to pay the personal loan addition to the EMI. It would great way to reduce the loan tenure and paying interest. ICICI bank not allows part payment of the personal loan. SBI, Axis bank, citibank allow part payment of your personal loan. Select personal loan which allows part prepayment.

Check for Interest on late payment and penalty. If we miss the loan payment, bank charges the late payment charges. ICICI and AXIS bank charges @24.00% per annum i.e. 2% per month on the overdue installment.

Most of time, we never ask part prepayment charges and preclosure charges of the personal loan. It would save the interest on the personal loan and it would encourage us to close the loan earliest. Try to negotiate the interest rate using CIBIL score. At final, we have to take control of our financial and our money. If you are not, no one cares.

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