Personal loan is a loan that does not require any collateral or security and can be obtained with minimal documentation. Just like most loans, however, it must be repaid in monthly installments.

You can use it to fund any expense including education, a wedding, a trip, home renovation, medical expenses, and even to buy a gadget, that means loan is not linked with end use of funds. You can even use the money to help out with the day-to-day expenses in case of a cash flow crunch. 

Read also: Home loan EMI Calculator and benefits

For example, a Car Loan or a Home Loan must be used for that specific purpose but the Personal Loan can be used for any purpose like vocational courses, home renovation, medical emergency, or to travel , just about anything. The choice is up to you.

You don’t need to mortgage your house, just so you can take that much-needed vacation trip!

There is minimum documentation required in order to obtain a Personal Loan. This also cuts down on the processing time for such a loan.

Some of the reasons for applying for Personal loan are:

Hence, personal loans are most preferred options for financing your immediate needs. Loan approval is quick and easy. Additionally, documentation required are minimum. 

 You can also claim tax benefits on the interest payments if you use the loan amount for buying, constructing or renovating a home, or for higher education purposes.

Personal loan eligibility: 

Loan eligibility is dependent on several factors such as your credit score, monthly income, other ongoing EMIs, etc. These terms vary from one lender to another.

Read also: Reduce your capital gain tax

Age Limit

If you are a salaried employee, then the age limit is 21-58 years. Age limit for a self-employed businessman or woman and professional is 25-65 years.

Monthly Income

Your net monthly salary is crucial to sanctioning your loan. Some lending institutions have a minimum monthly income criterion. While at some banks the eligibility criteria is Rs 25, 000 per month.

Nature of Employment

Some of the basic employment types are salaried employees, professionals, Self-employed person or professionals.

Employment Term

If you have been job-hopping in the recent past, an approval could be difficult.

For instance, many lending institutions sanction loans to employees with at least two years work experience, and at least one year from your current employer.

Similarly, self-employed professionals must have a minimum of three years of experience. Some consider your overall work experience.

Credit Score

This is a score assigned to you by a credit information company (for example companies such as CIBIL, Equifax, High Mark). It gives a prospective lending institution, a perspective about your history as a borrower.

A high credit score also gives you the bargaining power to negotiate better loan terms for yourself. Some banks have a minimum CIBIL Score requirement of 700, while some have 750. A score in the range of 700-900 is desirable.

Read also: How to get your credit report for free

How can you choose a perfect Personal Loan? 

There are several factors that go into choosing which Personal Loan works for you. Time, urgency and capacity to repay are important factors you need to consider.  At the same time, the main factors are Interest rate and loan charges.

Personal loan Interest rates:

Personal Loan Interest Rates are one of the highest interest charged amongst the other categories of loan.

Currently, personal loans are being issued at the rate of around 10% - 15% per annum.

The rate of interest varies from bank to bank. It also depends applicant's income level, past credit history, existing EMIs and loans, loan tenure, credit score and so on.

Along with the interest cost on personal loan, there will be some processing fee and other charges which you need to keep in mind.

Lower your EMI and choose your personal loan from desired FI:

EMI or equated monthly installments are an important part of a loan. It is the intervallic installment amount that you pay to clear your loan. 

It is important to calculate your EMI and find a way to keep it as low as possible. There are three factors that determine your EMI:

You can change the loan amount and tenure as you please until you finally find the right EMI. If you have a fixed loan amount in mind, then adjust the tenure until you find the right EMI. 

Formula for calculating Personal Loan EMI

The mathematical formula for calculating EMI is as follows:

P = Principal loan amount;

R = Rate of interest calculated on monthly basis i.e. (R= Annual rate of interest/12/100).

For instance, if R = 15% per annum, then R= 15/12/100 = 0.0125; and

N = the number of monthly instalments.

For example, if you borrow Rs 5,00,000 from a bank at 15% rate of interest for a tenure of 10 years then,

 EMI = 500000*0.0125*(1+0.0125)36      
                                              (1+0.0067)36 – 1

  EMI = Rs 17,333

How do I apply for a Personal Loan? 

You can apply personal loan by visiting any financial institution which is offering personal loan with best rates, at their branches or you can apply loan online by visiting their website.

These are the major FIs offers personal loans with best rates.

What other options do I have apart from Personal Loans? 

If you are not sure about a Personal Loan, some Banks offer several other options that you can use to generate funds for your needs. The Banks offer loans against the following:

Credit Card – Depending upon your account and requirements, you can get the loan credited to your Bank account. For instance, Insta Loan allows for immediate loan disbursal into the your Bank account, while the Insta top up Loan allows the same for an amount that may be beyond your credit limit.

Securities – You can pledge your securities with the Bank and obtain a loan. The processing is quick and comes without any prepayment or foreclosure charges. You can choose which security you want to pledge: Mutual Funds or Shares.

Digital Loans against Mutual Funds – some Banks are offering Digital Loans Against Mutual Funds.

Read also: Know the importance of credit report

Please comment below with your suggestions / queries.

Earlier, for every transaction that you made, you had to pay for it in cash. But in today's world, the case is not the same after the invention of plastic money such as credit and debit cards.

Each and every transaction are made with plastic money only. Even financial institutions encourages this plastic money as these are cost effective in maintenance and issuance. This plastic money are profiting the issuing agencies in the form commission or charges or interest on credit they provided. Card transaction is often more secure than other forms of payment, such as cheques, because the issuing bank commits to pay the merchant the moment the transaction is authorized, regardless of whether the consumer defaults on the credit card payment or with any dispute and it reduce the back office expense of processing checks/cash and transporting them to the bank. The main benefit to the cardholder is convenience.

May be, most of you people aware of this credit card culture but i assured you that after reading this article, you will get some more useful information about credit cards. Lets get into the article.

Registration	This feature enables to Register Your Mobile and account number for Missed Call Banking
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SUKANYA SAMRIDDHI ACCOUNT

Sukanya Samriddhi Account has been introduced vide Government of India Notification No. G.S.R.863(E) dated December 02, 2014 and circulated to Banks by Reserve Bank of India vide their letter No.RBI/2014-15/494/IDMD(DGBA).CDD/No.4052/15.02.006/2014-15 dated 11th March 2015. Facility to open accounts under the scheme is now available at all bank branches and Post Office.

Who can open the account: A natural/ legal guardian on behalf of a girl child (age should be less than 10 years)

Maximum number of accounts: Upto two girl children or three in case of twin girls as second birth or the first birth itself results in three girl children

Minimum and Maximum Amount of Deposit: Min.1000 of initial deposit with multiple of one hundred rupees thereafter with annual ceiling of Rs.150000 (maximum) in a financial year

Tenure of the Deposit: 21 years from the date of opening of the account

Maximum period upto which deposits can be made: 14 years from the date of opening of the account.

Interest on Deposit: As notified by the GOI, compounded annually with option for monthly interest pay-outs to be calculated on balance in completed thousands.( Current rate 8.30%w.e.f 1st January, 2018)

Tax Rebate: As applicable under section 80C of the IT Act, 1961. In the latest Finance Bill, the scheme has been extended Triple exempt benefits i.e. there will be no tax on the amount invested, amount earned as interest and amount withdrawn.

Premature Closure: Allowed in the event of death of the depositor or in cases of extreme compassionate grounds such as medical support in life threatening diseases to be authorized by an order by the Central Government

Irregular Payment/ Revival of account: : By payment of penalty of Rs.50 per year alongwith the minimum specified amount per year

Mode of Deposit: Cash / Cheque / Demand Draft / Transfer / online transfers through internet Banking .

Note: Standing Instructions can be given either at the Bank Branch or set through Internet Banking for automatic credit to Sukanya Samriddhi Account .

Withdrawal : 50% of the balance lying in the account as at the end of previous financial year for the purpose of higher education, marriage after attaining the age of 18 years.