4 MinsFebruary 27, 2020
A Personal Loan provides easy access to money when you need it the most. You can use a personal loan to deal with emergencies, such as unforeseen medical expenses, loss due to natural calamities, etc, as well as for planned expenses such as wedding
expenses, home renovation, a family vacation, and so on.
That’s why a Personal Loan is rightly referred to as a “loan in need”; or your financial lifeline.
To avail of a Personal Loan, you do not have to mortgage your existing assets (house, car, jewellery, investments, etc.). Characteristically, it is an ‘unsecured loan’. For the bank, while granting the loan what matters is the loan
amount and the borrower’s credentials such as the nature of the job, employer details, net monthly income, residual working lifespan and repayment capacity as indicated by the credit score.
Moreover, when compared to other loans, a Personal Loan requires minimal documentation. The loan is usually disbursed within 48 hours, sometimes even on the same day (if you satisfy the eligibility criteria and all documentation is complete),
and at times the loan is pre-approved for you.
In case of a Pre-approved Personal Loan, the five key benefits are:
1. Zero documentation, if you are an existing customer of the bank
2. Online paperless process and the funds are transferred into your account almost instantly
3. The loan can be used for multiple purposes
4. Likelihood of lower processing fee
5. Chances of an attractive rate of interest
If you wish to get a Pre-approved Personal Loan, here’s what you should do:
- Maintain a healthy credit score (A bank while granting a loan check your credit score. Higher the credit score ---750 and above ---of your credit report, the better it is.)
- Make sure you have not availed of a personal loan in the last six months (It does not depict a very healthy picture of your personal finances)
- Ensure your current EMIs are not exceeding 40-50% of your net take-home pay
- Avoid multiple loan applications (Because it negatively impacts your credit score)
- Use a credit card with discipline and pay all your dues on time
- Maintain a fair balance between secured and unsecured loan (since it weighs on your credit score)
- Consolidate debt as far as possible (in the interest of your financial wellbeing)
The bank before offering a pre-approved Personal Loan (also called instant personal loan) evaluates your credit behaviour and creditworthiness. If you have displayed a good track record in the past and can demonstrate a respectable repayment capacity,
the bank will grant the loan almost instantly.
That said, as a prudent loan planning exercise always make it a point to know the EMI (Equated Monthly Instalment) before taking the Personal Loan. Axis Bank’s Personal Loan EMI calculator,
an effective online automatic tool, can help you in this regard and is extremely easy to use. It provides the answer within a split second and the output also makes available the break-up of the total payment (principal and interest). Further,
it presents the amortization schedule as per the interest rate on personal loan and tenure of your loan.
Axis Bank grants Personal Loan anywhere between Rs 50,000 to Rs 15 lakh at a competitive rate of interest and with a flexible repayment tenure ranging from 12 to 60 months.
While a Personal Loan proves extremely handy in times of need, do read the fine print carefully and ensure you are borrowing for the right reasons. In many such cases a wedding loan can also come in handy.
Plus, consider your need, not just the eligibility. Borrowing within means and being realistic is important because nobody else knows your repayment capacity better than you. It is pointless overshooting your budget and not fulfilling your EMI
obligations later. Furthermore, it weighs on your credit score and reflects poorly on your creditworthiness. Hence, borrow sensibly!
[Also Read: Mistakes to Avoid While Taking a Personal Loan]
If you wish to foreclose or pre-pay, here’s good news: Axis Bank currently levies no charges for part-prepayments and foreclosure of a Personal Loan.
Consider a personal loan from Axis Bank and don’t let the need for money hold you back from living fully.
Disclaimer: This article has been authored by PersonalFN, a Mumbai based Financial Planning and Mutual Fund research firm. Axis Bank doesn't influence any views of the author in any way. Axis Bank & PersonalFN shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.