Whether you are planning a wedding, furnishing a new home or looking forward to a vacation, a personal loan can help you achieve these dreams and much more. Personal loan is one way through which you can gain financial assistance and support for your personal desires, without having to dip into your hard earned savings. It is easy to get a personal loan sanctioned in a matter of few days and being unsecured, you need not have any assets to get approved for it. The amount which is sanctioned to you will depend on a few key factors such as your take-home salary. The loan amount can vary from as little as Rs. 20,000 to as much as Rs. 25 lakhs. Let’s consider the following example of how a personal loan could work out:
Rajat Malhotra is a senior software engineer working with a multinational tech firm. His father, a retired government employee, plans to buy a residential plot in his hometown, Kanpur. The land costs around Rs.10 lakhs but Rajat’s father is short by Rs. 3 lakhs. As Rajat knew that he could easily afford a personal loan of 3 lakhs with an annual salary of Rs. 8 lakhs, he asked his father to proceed with the purchase. At an interest rate of 14% Rajat planned to repay the loan amount in a span of 3 years with an EMI of Rs. 10,250 approximately. With this personal loan, Rajat could help his father purchase his dream land, the first step towards building a family home.
The following are some key tips for choosing a personal loan:
- Before applying for the personal loan check your credit report
- Plan your budget beforehand
- Borrow only the amount you need and not in excess
- Find out the APR (Annual Percentage Rate) i.e. the interest on the loan
- Understand all charges associated with the loan such as prepayment penalty etc.
- Be careful about the risks involved, in case of secured loans
Fulfill your desires with a personal loan
Let’s take a look at how personal loans fulfill dreams:
- For purchasing household appliances: With the temperatures soaring if you have been planning on another AC, now is the time to go for it. If you have been eyeing the new and spacious refrigerator or the high definition LCD, you can opt for a personal loan. Purchase of furnishing and consumer durables are among the leading uses of personal loans.
- For organizing family functions and marriages: A wedding is an auspicious occasion in one’s life. No Indian wedding is complete without display of pomp, grandeur and gold. You may want to be the trendsetter with an elaborate guest list. A radiant and expensive venue with a lavish variety of food can prove quite expensive. People often opt for personal loans for big occasions like family functions and marriages. Plan your dream wedding and opt for a marriage loan which is offered by most banks under the bracket of personal loans.
- For going on a vacation: Travel is one emerging area on which personal loans are utilized. A personal loan could turn your dream holiday into a reality. If you have been planning a dream holiday for months but have not saved enough, you can go ahead and book your trip with the help of a personal loan and pay it off bit by bit later on.
- For making the down-payment of a home loan: A personal loan can ensure that your dream home is not too far away. You can opt for a personal loan to provide down-payment for a home. Afterall, a home loan typically provides you funding for up to 80% of the cost of the house and the rest has to borne by the home owner. Normally down-payments range from 15% to 20% of the total value of the property and there are additional expenses for registration, etc. of the property, which you can pay for using a personal loan in case you are low on savings.
- For expanding the business: In case you are a business owner looking to expand your current operations, a personal loan in the form of a business loan might just be what you need. You can also get a personal loan for starting up your own business provided you can submit the required documents and a business plan in accordance with the requirements of the lender. Following are some of the leading personal loan providers in India:
Personal Loan Interest Rates of some Leading Banks*:
1yr MCLR + 2.15% onwards
11.49% to 17.50%
Base Rate + 3.50% onwards
*The rates mentioned above are indicative and subject to periodic change.