4 March 2023
A financial emergency can occur at any time. But even without those occurring, you may need to take out a personal loan to achieve several of your life goals. This type of loan can be used for anything from a wedding to paying for a child’s education, purchasing a gadget, or even a medical emergency. It is entirely up to you to decide what you want to do with it.
Banks do not require any collateral when you apply for a loan, as you may be aware. As a result, it’s classified as an unsecured credit service. It requires the same minimal documentation as a credit card loan. On loans, banks charge a fixed interest rate.
When you apply for a personal loan, you are asking a lending institution, such as a bank or credit union, to lend you a specific amount of money. This loan can be used for a variety of purposes, unlike a mortgage, which must be used to pay for a home, and an auto loan, which must be used to finance a car purchase. You could use it to pay for college or medical expenses, a major household item like a new furnace or appliance, or to consolidate debt.
Personal loan repayment is not the same as credit card debt repayment. A personal loan requires you to pay fixed-amount instalments over a set period of time until the debt is completely repaid.
Before you apply for a personal loan, you should be aware of the following terms:
The maximum loan amount is entirely at the discretion of the bank. Some banks provide personal loans up to Rs. 50 lakhs, while others limit them to Rs. 25 lakhs. If you are a salaried employee, you can apply for the loan based on your annual earnings. The bank has complete discretion in determining the loan amount.
Suppose your monthly income is between Rs.20,000 and Rs.25,000, for instance. Banks calculate your EMI to be approximately 45-50 percent of your monthly income when it comes to monthly repayments. As a result, your personal loan’s average EMI will be around Rs. 12,5000.
Yes, you can get a personal loan with a low salary. Individuals with low incomes are frequently faced with a cash crunch due to a plethora of financial responsibilities. Low wages can be a barrier when applying for a personal loan; however, some banks or platforms like Fibe (formerly EarlySalary) have come to your rescue to alleviate your concerns.
Even if your monthly income is less than Rs. 15,000, you can easily qualify for the loan.
Before you apply for a personal loan with a low income, review the eligibility criteria, monthly EMIs, loan processing fees, and your credit score, among other things.
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