Key Consideration for Successful Personal Loan -Unity Bank
5 min read | 10 months ago
Are you planning to soon apply for personal loan to cover any necessary costs? People take personal loans for various reasons. A Paisabazaar survey outlined how 16% of personal loan borrowers chose this funding route for vacations between January and March, 2023. This figure went up to 24% in the quarter between April and June, 2023. These loans do not require collateral (and are hence also known as unsecured loans) and help meet sudden financial needs, ranging from home repairs and renovations to purchasing consumer durables to meeting medical emergency costs.
However, there are a few things that you should know before you submit your application. Here’s looking at the same in this article.
Assess Financial Situation and Needs
Before you submit your application for a loan in a bank, evaluate your financial situation carefully. Select a loan amount that you can afford to repay. Avoid applying for a higher amount than your actual requirements. It will only saddle you with more debt in the long run.
Understand Loan Terms, Rates, And Options
Before applying for a personal loan, make sure you understand some core aspects. They include the following:
Interest rates: Banks and financial institutions have varying interest rates on personal loans. Since these are unsecured loans, they usually have higher rates than their secured counterparts. Compare interest rates across multiple lenders before coming to a decision.
Terms and conditions: Do not sign any loan agreement before understanding the terms and conditions of the lender. These include the monthly EMI amount, loan tenure, prepayment charges, and other conditions. Keep an eye on additional costs like processing fees and other charges/penalties applicable for late payments. Look out for hidden costs before you finalize your loan agreement.
Loan Tenure: Choosing the tenure is crucial. A longer tenure may equate to a lower monthly repayment amount, although it will entail higher interest costs in the long run. In this case, while your EMI will be higher for a shorter tenure, it will mean a lower loan cost overall.
Available options: It is wise to compare your available options on the basis of interest rates, eligibility criteria, and other factors. It will help you choose the right bank or financial institution for your personal loan.
Check Eligibility and Prepare Document
Keeping an eye on the eligibility criteria is essential before applying for a personal loan. Most lenders have minimum age and income requirements. They will verify your repayment abilities along with your credit score. Aim for a CIBIL score of 750 or higher to increase your chances of loan approval. The bank may also review the number of years of employment left, work experience, and company profile.
The necessary application documents usually include the following:
> Identity and age proof (Aadhar card/passport/Voter ID card)
> Residence proof (Aadhar card/Voter ID card/sale deed, etc)
> PAN card
> Income proof (Salary slips, Form 16, income tax certificate, bank statements)
> Passport-size photographs
> Self-attested and duly filled form for the personal loan
Finally, Submit the Application
Take your time while applying for a personal loan. You can easily apply online at the website of your chosen bank/financial institution. Many banks offer a simple online application process where you can fill the form and upload the necessary documents before submitting your application.
You can also visit the lender’s branch and fill the application form while submitting your documents. You can also submit a request through an email or by contacting the customer service department. The bank will assess your eligibility, and a customer service representative will contact you to take the process forward.
Once you submit your application, the bank will verify your eligibility and repayment amount. If your application is successful, it will sanction the loan and undertake disbursal once you agree to the terms and conditions.
Conclusion
A survey by Saral Credit reveals that 67% of Indians have taken personal loans to meet their financial needs at some point in their lives. 36% took these loans for home renovations or purchases, while 9% took them for vacation and travel. So, personal loans are undoubtedly helpful options in emergencies or pressing situations. You can also use them to fulfill other aspirations and repay the amount comfortably over a few years. Before applying, however, keep these pointers in mind for a smoother and hassle-free experience. You may consider applying for a personal loan from Unity Small Finance Bank to access funding swiftly for your needs.
FAQs
About Unity Small Finance Bank
Unity Small Finance Bank is committed to making banking simpler and more accessible for everyone. Our services include Savings Account, NRI account, Current Account, Fixed Deposits, and Personal Loans offering flexible tenures and attractive interest rates. We also offer financing options like MSME Loans and Microfinance to support businesses and underserved communities. Learn more about Unity Small Finance Bank here.
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