Personal Loans FAQs

Personal loans are perhaps the most popular type of loan next to home loan. This is because you can use these loans for any reason- higher education, home renovation, marriage, foreign trips, etc.

The following are some of the frequently asked questions (FAQs) about personal loans:

Q1. What are the documents required to apply for a personal loan?

Different banks have different procedures regarding the paperwork and formalities for personal loan applications. However, most banks require the following documents- ID proof, residence proof, income proof, Income Tax Return for the past 3 years (for business owners and the self-employed), salary slip for the last 3 months (for salaried individuals) etc.

Q2. How much time do you need to wait before the bank contacts you, and how much time for loan approval?

Most banks contact the loan applicants within 48 hours of application submission. Loans are usually approved and funds disbursed within a week.

Q3. How is a personal loan repaid?

You can repay a personal loan by issuing post-dated checks for the full loan tenure. Otherwise, your lender can deduct the EMIs from your salary from your bank account automatically every month through the Electronic Clearing System (ECS).

Q4. What happens if an EMI gets delayed?

An occasional delayed EMI doesn’t have a serious impact in most cases. This is because the lenders usually give you up to 30 days of grace period during which you can pay the EMIs even if you are late. However, if the EMIs are delayed frequently and fall under a higher DPD category (Days Past Due), then the bank may report them to CIBIL which is the top credit rating agency in India and it can hurt your credit score.

Q5. Can the interest rate change during the loan tenure?

If a personal loan has fixed interest rate, then it doesn’t change with market fluctuations. However, if the rate is floating interest rate, then it can both increase or decrease with the changes in the market conditions during the term.
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