A personal loan is an unsecured credit instrument that is given by Banks and NBFCs to individuals in need of ready funds. The financial institutions charge interest on the money lent that has to be returned along with the principal at periodic intervals (EMIs) over a period of time (tenure). The loans are unsecured so as a borrower you need not provide any collateral, asset or guarantor.

Unlike other type of loans, a personal loan is an extremely flexible financial instrument. By their nature these advances are for personal use and hence you need not provide a reason nor do the lenders ask for a purpose on how the loan amount will be spent. The loan seeker is free to use the money for any reason as long as the amount is paid back.

It is important as a loan seeker to look at multiple criteria when availing a loan. The most important obviously is the rate of interest which will decide how high or low EMI will be. But apart from these there are other criteria you should look for like pre-closure if an early payment if anticipated, part payment facility and amount (if your needs are flexible). It is important to think of all these and not hasten into getting a loan. You can seek advice about all this when you call us to get a loan.

To avail a loan, you will need to submit the following documents:

• Passport-size photographs
• KYC Documents – PAN, Aadhaar, Driving license, Voter’s ID, Passport
• Bank account statements for three months

The act of paying off all of your outstanding amount before the end of the loan tenure is called pre-closure. It is a great option if you have the money as it will save you from paying interest for the rest of the tenure. Most banks/NBFCs allow you to pre-close a loan only after a certain number of EMIs have been paid with a small charge on the outstanding principal. A few banks/NBFCs will allow an earlier pre-closure with no charge so it is important to realize one’s payment plan before availing a loan.

Some lenders also allow you to part pre-close a loan which means that you will be able to pay off a part of the outstanding amount instead of the full amount. This is really helpful when you anticipate small amounts of extra money coming to you at periodic intervals. It helps lessen the interest burden and cuts down your EMIs at periodic intervals. Some institutions allow for a single payment a year while some others allow multiple payments. It is important to stress again that you plan your payments before taking a loan as such a facility can be really helpful.

There are three options that most banks provide as a facility to pay your EMI. If you get a loan from the same bank where you have a banking account then a direct debit option is available. If not then you can pay EMIs through post-dated cheques (PDCs) or National Automated Clearing House (NACH) mandates. In the case of NBFCs then only the last two options are available.