Many Indian households are considering Personal Loans to fulfil their financial needs. From making big-budget purchases to meeting emergencies, these Loans are a sought-after choice. Now, there are different Personal Loans available in the market. They fulfil specific needs. For instance, you get a Loan for financing a car, house, wedding, vacation, or medical emergency.

But if you do not want to restrict yourself to a specific purpose, a Personal Loan is the best. It lets you decide the end-use based on your discretion without informing the lender. Also, you need not submit any collateral to get the Loan. This makes it convenient for all. But several aspects determine your eligibility and affect Loan approval. You should understand them and prepare accordingly. Here are some aspects you should be aware of as a beginner.

Eligibility criteria

You need to understand this aspect for effectively planning your Loan application. Although the eligibility differs between banks, the general parameters are the same. They include your age, income, employment, existing debts, credit score, etc. The lending amount, tenure, equated monthly instalments, and interest rates depend on them. Hence, you should check Personal Loan eligibility before applying.

Loan tenure

Lenders approve Personal Loans for anywhere between one to five years. The EMIs are spread out, making it easier to repay flexibly. Although you have a longer time to repay, you need not stretch the tenure to five years. You can shorten it and pay off the Loan faster. This reduces the interest pay-outs and overall Loan burden. Meanwhile, a longer tenure reduces the EMI amount but increases the Loan amount.

Loan amount

You can apply for up to Rs. 25 lakh of the Loan amount. This can fulfil diverse expenses without any compromise. But you need not necessarily apply for the maximum amount. Moreover, lenders finalise them based on your eligibility. You need to decide the borrowable amount based on your affordability. Check the Personal Loan interest rates it attracts and choose accordingly. Lenders can calculate them through the EMI calculator.

Interest rate and charges

Considering Personal Loans are unsecured, they do not require collateral. Hence, lenders need other means to protect their interests. For this, they charge higher interest rates. At present, most banks are charging up to 9% to 12% interest rates. But this depends on specific eligibility factors. Therefore, never go by the quotation. Check them against your eligibility. You can do so conveniently with eligibility and Personal Loan EMI calculator.

Besides interest rates, banks also levy specific changes throughout the Loan. They include documentation expenses, processing fees, administrative charges, etc. Check them thoroughly to calculate the accurate Loan cost. The information is accessible on websites and the Banking app.