cash loans online

A personal loan can be used for debt repayment, wedding or travel expenses, buying new items, home renovation, and contingency situations, among others. A short term personal loan is generally unsecured in nature and is offered on the basis of the borrower’s creditworthiness, along with their repayment capacity. The loan amount can vary from Rs.50,000 to Rs. 50 lakhs, while the repayment tenure might range from 24 to 60 months. Personal loans are usually offered by banks, Non-Banking Financial Companies (NBFCs), and online lending agencies. Lenders offering cash loans online are increasingly gaining traction due to smooth application procedures, fast approvals, and quick disbursals. Here are a few essential factors one must keep in mind while availing a personal loan:

1. Purpose
While personal loans can be used for myriad purposes, some individuals might use it for purchasing a new or used automobile or to make a down payment for the purchase of residential property. It is crucial for you to have a clear picture of the purpose for the loan amount in order for you to determine applicable interest rates and repayment tenure accordingly.

2. Eligibility
As most personal loans do not demand collateral as security, lenders are bound to check your eligibility before granting you a loan. You need to be a salaried individual or the owner of a business with a minimum monthly income of INR 30,000 to be able to apply for a personal loan. Your age, occupation, credit history and credit card dues are deciding factors when it comes to personal loan eligibility. Hence, it is essential for you to check whether you match the requisite criteria before applying for a loan.

3. Credit Appraisal
This is a quick check conducted by the lending institution to gauge your ability to repay the loan amount. For you to appear in a favourable light, it is vital for you to have an agreeable credit history and a minimum score of 700 or above. While your loan application might get accepted even when you have an insufficient credit score, you should expect higher rates of interest in that case.

4. Loan Disbursal Process
This is the process wherein the approved loan amount is handed over to the borrower in the form of an account payee cheque/draft or an electronic transfer to one’s savings account. While the disbursal process might take a few weeks’ time in the case of banks, online lenders disburse the loan amount in a day or two.

5. Duration
Depending on your repayment capacity, the lender will offer a repayment period ranging from 12 to 60 months. This period is usually divided into Equated Monthly Installments (EMIs). The higher the EMI, the quicker you will be able to pay off the loan amount.

6. Interest Rate
It is a known fact that the primary aim for lenders is to earn interest on the principal amount over an extended period of time. In the case of personal financing, the interest rate might be anywhere between 10.99 to 22.00% per annum. The interest is divided into EMIs for your convenience. To garner lower interest rates, nurture a good credit score and pay your outstanding bills on time.

7. Processing Fees
When a bank, NBFC, or an online lender offers a loan, they usually charge a processing fee which ranges typically between 2-5% of the loan amount and is non-refundable in nature. Owing to the long-standing relationship shared by the lender and the borrower, this fee might be waivered in some cases.

8. Foreclosure
Foreclosure refers to the complete repayment of the loan amount before the end of the loan tenure. In the case of prepayment, foreclosure demands that the borrower should pay an additional fee, ranging from 2-5% of the cumulative loan amount.

Keep these factors in mind while filling out your loan application. Be pragmatic when it comes to financial decisions, and in case you harbour lingering doubts, consult a financial adviser for the same.