About Personal Loan

What is Personal Loan?

A Personal Loan is an unsecured loan that may be short term or long term, given by a bank or non-banking finance company (NBFC) to meet their customers’ personal expenses. An individual can obtain a personal loan based on his income, credit score, repaying capacity, etc

Usually, personal loans are disbursed within a few days once the individual applies after going through some background verification processes.One of the most striking features of personal loans is their flexibility. From emergency medical situations to planned events like wedding expenses or home repairs there are many personal loan options available.

Personal Loan Eligibility for Salaried vs Self-Employed

Salaried Individuals:

1. Must be a resident Indian citizen

2. Age between 21 and 60 years

3. Minimum monthly income of ₹15,000–₹25,000 (varies by bank)

4. At least 1–2 years of total work experience

5. Minimum 6 months with the current employer

6. Good credit score (typically 700 or above)

Self-Employed Individuals:

1. Must be a resident Indian citizen

2. Age between 25 and 65 years

3. Minimum annual income of ₹2 lakh–₹5 lakh (varies by lender)

4. Business must be in existence for at least 2–3 years

5. Valid business proof (like GST registration, ITR filings)

6. Good credit history and repayment track record

Documentation Required for Personal Loan

Essential Documents You Need to Apply for a Personal Loan,

1. Identity Proof: Aadhaar Card, PAN Card, Passport, Voter ID, or Driving License

2. Address Proof: Utility bills, Rental Agreement, Passport, Aadhaar, or Voter ID

3. Income Proof for Salaried: Latest 3–6 months’ salary slips

4. Income proof for Self-Employed: Income Tax Returns (ITR) for the last 2–3 years

5. Bank Statements: Last 3–6 months

6. Photographs: Recent passport-sized photographs

7. Employment Proof: Offer letter, employee ID, or business proof for self-employed applicants

Personal Loan Application Process

To apply for a personal loan online at Fincover, follow these steps,

1. Visit www.Fincover.com

2. Hover on “Loans” and Click on “Personal Loans”-> “Apply for Personal loan”

3. Select the type of profession, Enter your Net Monthly Salary, Select the Loan amount required, Select the type of residence

4. Enter your Personal details such as Name, mail ID, Pincode, PAN, and state

5. Confirm your registration with an OTP

6. A lead will be created, and the customer care agents will contact you to seek documents and find offers from suitable banks or NBFCs. after which your loan will be processed.

Top Reasons for Personal Loan Rejection

Common Mistakes That Can Lead to Personal Loan Rejection,

1. Low credit score: Lenders rely heavily on credit score to assess your creditworthiness. A low score indicates a higher risk of default.

2. Insufficient income: Not meeting the lender’s minimum income requirements hinders your ability to repay the loan.

3. High debt-to-income ratio: Existing debt obligations can limit your capacity to handle additional loan repayments.

4. Unstable employment history: Frequent job changes or short employment tenure raise concerns about your income stability.

5. Incomplete or inaccurate application: Ensure all information provided is accurate and complete to avoid delays or rejection.

6. Multiple loan applications: Applying for several loans simultaneously can negatively impact your credit score and raise red flags for lenders.

Tips to Improve Your Chances of Approval

Tips to Improve Your Chances of Approval,

1. Build and maintain a good credit score: Make timely payments on existing debts, avoid exceeding credit card limits, and consider credit-building strategies.

2. Increase your income: Explore ways to increase your income, such as seeking a raise or taking on additional work.

3. Reduce debt: Pay down existing debts to lower your debt-to-income ratio and improve your financial standing.

4. Maintain stable employment: Aim for consistent employment with a reputable organization.

5. Submit a complete and accurate application: Double-check all information and provide necessary documentation promptly.

Charges & Fees related to Personal Loans

Hidden Costs You Should Know Before Applying for a Personal Loan

1. Processing Fee: Usually 1% to 3% of the loan amount

2. Prepayment/Foreclosure Charges: 2% to 5% if paid before tenure ends

3. Late Payment Penalty: 2% to 3% per month on overdue EMIs

4. Loan Cancellation Charges: Minimal or none, but interest for the interim may apply

5. Stamp Duty & Documentation Charges: As per state laws

6. Cheque Bounce Charges: ₹500 to ₹1,000 per bounce

7. Loan Rescheduling Charges: If you modify tenure or EMI

8. Credit Report Charges : Sometimes applicable if the lender pulls your CIBIL

Personal Loan Repayment Options

Flexible Ways to Repay Your Personal Loan Without Stress

1. Fixed Equated Monthly Installments (EMIs): This is the most common repayment option, where you pay a fixed amount every month throughout the loan term. The EMI covers both principal and interest.

2. Part-Prepayment: You can make additional payments towards the loan principal beyond your regular EMI, reducing the outstanding balance and potentially saving on interest costs.

3. Foreclosure: Some lenders allow full repayment of the loan before the scheduled end date, typically subject to prepayment charges.

4. Automatic Debit: Set up automatic debits from your bank account to ensure timely payments and avoid late fees.

Remember: Always check with your lender for specific repayment options and any associated fees or charges.*