All you ever needed to know about a personal loan

We all have an endless list of needs in our daily lives. It is either that new TV or the latest mobile or even that dream holiday; we just have to meet those demands. The simple way to get this done is by choosing the right loan method. There is a massive difference in the way a loan is seen today as compared to the past. Today, almost everyone in the world carries a loan or an EMI. It has almost become a practise to ensure you are carrying loans to stay motivated with your job 
Why is it so popular?

A personal loan is a simple loan that is given to an individual to reach out and aid their personal expenses or commitments. This loan is not tied down to any product or buy that you have made. It is a general loan that can be taken through your banking partner with minimum documentation. So, if that is the case, what are the prerequisites to take the loan? Valid ID proof and you need to specify the purpose of taking the loan, address proof and your financial statements. It is a quick solution too as you are granted the loan is as quickly as a day to a week.

Loan period and amount
Yes, so that does mean you can get a loan relatively easily as compared to a bike or car loan. The other advantage you have with a personal loan is that you can take an amount ranging anywhere between 10k to even 30 lakh. The basis of the loan approval is the lender and your ability to clear the amount back. Personal loans are generally shorter in duration as compared to your home or car loans. The duration of a personal loan can be between 1 to 5 years and can be repaid across usually flexible solutions based on your credit history.

Interest rates
Personal loan interest rates depend upon the borrowing firm as well as the credit history that you have. There are a few factors that aid this such as your income and the company you work for, your past loan history and the bank you are tied with.

Costs that come by
There are processing fees that you are charged upon taking the loan amount and this is due when you take the loan itself. This is not refundable and is between 0.5% to 3%. This depends upon the bank that you are approaching. In case you are completing the loan before your stipulated tenure, you have to pay a pre-payment fee which is in the range of 2% to 5% of the remaining loan amount. This normally accepted only after a lock in period that is completed. There are charges if your payment is done late too; this is about 2% or 3%. Lastly, if your cheques are not honoured by the bank, you are given a penalty of about Rs 500/-.

You can approach the bank that you have a savings account or personal banking account for to open a personal loan. It would be a quicker process for sure and your verification would be done fast too. Remember to always take a personal loan within your payable amount and to adhere to the payment charges so that you always pay on time and avoid defaults.