How to Take a Loan? Check How to Apply, Eligibility, Documents Get rid of all hassles in your way of taking a loan. Here we bring to you all some important details that will guide you on how to take a loan from a bank. You can also take loans from a certified NBFC- Non- Banking Financial Company. Check out the various types of loans and how to apply for them.

 

What is a Loan?

A loan is a sum of money that one can borrow from a company or any person. You are bound to pay back that money with interest in a said period of time. So, a loan consists of three main components

– a principal amount or the borrowed sum of money, rate of interest and the time (duration for which the loan is taken).

 

Types of Loans

Loans can be broadly classified into 2 categories-

 

SECURED LOANS                                                           UNSECURED LOAN

The one who borrows money pledges some asset/collateral. This acts as a security for the loan.

No collateral/ asset is pledged.

It is easily approved.                                                      The approval process can be difficult.

This loan has a longer repayment term.                     This loan usually has a shorter repayment term. The interest rates are lower.                                         Higher interest rates.

 

Furthermore, on the basis of the repayment period, loans are of the following types- REVOLVING LOAN                                                                TERM LOAN

In this type of loans, you can spend the money, repay it, and spend the amount again as long as you do not surpass the limit.

You have to pay back the loan every month in definite equal monthly instalments (EMI). This is decided at the time of taking a loan.

Example- Credit Card                                                     Example- Car Loan

Interest rates are higher.                                               Interest rates are lower.

 

 

Some common types of loans are-

 

1.    Personal Loan

2.    Car Loan

3.    Home Loan

4.    Business Loan

5.    Gold Loan

6.    Education Loan

 

Some Important Terms Involved in Loan Taking

Principal- This is the amount of money you borrow at the time of taking a loan. i.e., the money before interest.

 

Tenure- It is the time in which you are supposed to pay back the loan.

 

Rate of Interest- It is the rate at which interest is charged on your loan. It is calculated on the principal amount.

EMI- EMI stands for Equated Monthly Instalments. It is the money that you pay every month towards the loan you opted for. This amount includes some principal + interest

 

Down Payment- This is the money that a person has to pay by himself i.e., from his/her pocket when purchasing something expensive. For instance- you are buying a flat worth Rs.80 lac, the bank agrees to give you 70 lacs, the remaining 10 lacs is the amount you pay from your side. This is called a Down payment.

 

Penalty Fee- A bank charges a penalty fee when a borrower fails to deposit your monthly instalments timely.

 

How to Take Loan in 4 Easy Steps

It is much simpler to take a loan from a bank now. Here we bring to you a few important factors that you must consider before applying for a loan-

 

✔ Research on the Interest Rates offered- You must inquire and compare interest rates. In addition to this, the tenure, EMI, and other charges charged by a bank or NBFC are important

to know beforehand. Choose the plan that best suit you. Look for lower rates of interest.

 

Click on the link   online EMI calculator . This will help you calculate your instalments.

 

✔ Credit Score- One must have a clean background when applying for a loan. A pending loan can lead to problems in your fresh loan taking process. Moreover, if you have some other

loan linked to yourself as well, your record of repayment is also checked. Timely repayments

add to your credit score. A score of 750 is a must.

✔ Weigh Your Financial Status- Be well aware of your financial situation. It is better to take loans that suit your current financial status. Such loans are easy to pay back.

 

Once you are clear with all the terms and plans, it is time to apply for a loan. Follow the below-mentioned steps to take a loan and it will be easier than ever.

 

1.   Determine your Loan Value

The first thing that one has to decide on is what type of loan he/she requires and how much. For instance- you have to buy a flat worth Rs. 80 lacs. Now plan on how much you need to borrow from the bank or NBFC. Suppose you have 10 lacs with you. You can use this Rs.10 lac as a down payment. Now you require a loan of Rs. 70 lacs from the bank or loan-giving company.

2.   Check eligibility

When you have decided on how much money you need in the form of a loan, you must know about the eligibility criteria.

 

Salaried                                                   Self-Employed

Age               23 years to 58 years                                                           28 years to 65 years

 

Income           Rs.25,000                                                                             Minimum turnover of Rs.40 lakhs

 

Credit score       Above 750                                                                           Above 750

 

 

 

3.   Reach Out to the Bank

Once you know that you are eligible you can reach out to the bank. For this, you can visit the bank branch or the company branch. You can also apply for a loan online. Get a clear idea of the EMI, rate of interests, and tenure to match your monthly financial income.

 

4.   Submit Documents and Finalize

Lastly, you are supposed to submit the documents. Given below is a list of important documents for taking a loan.

 

Submit the documents and finalize the deal.

 

 

Salaried                                                                                       Self-Employed

 

Application form with recent passport size photograph.

Application form with recent passport size photograph.

A self-certified copy of your Identity proof and

Address proof

A certified copy of your Identity and

Address proof

Bank statements of last 6 months                                                                       Bank statements of last 6 months

 

A cheque of the Processing fee                                                                           Processing fee cheque

 

A copy of the Latest Salary Slip                                                                            A copy of the Business proof

 

Form 16                                                                                                                    Last 3 years Income Tax returns (self and business) as well as 3 years Profit/Loss and Balance Sheet