Personal Loans: Multi-purpose and easy

Personal loans are a great short-term loan option if  you are looking for money to take care of unexpected expenses. These loans are popular because they can be used to fulfil any monetary obligation – as a result, the takers for these types of loans are fairly high.

The advantages

You can take a personal loan for any purpose – from going on a vacation or to pay off a long-standing debt. These loans are usually easy to secure and take little time to process. Here are a few of the key benefits of taking personal loans:

• They can be used to fulfil any monetary goal
• Less processing time
• Flexible repayment options.
  

Can self-employed individuals apply for personal loans?

Even for self-employed people, securing a personal loan is fairly easy. Each bank has its own eligibility criteria, but if you fulfil it, securing a personal loan is not hard.

What factors do banks consider for applications from self-employed individuals?

1. Age: Most banks stipulate that you need to be at least 21 years of age. However, each bank has its own eligibility criteria (for example, a large private bank requires you to be a minimum 28 years of age) for your personal-loan application approval.

2. Stability: Proving business stability could be important. For most banks, this means you need to have been in the same business for at least two years.

3. Income: Your repaying capacity is a deciding factor in the approval of your personal-loan application. If you are regularly earning at least Rs 25, 000 per month from your business, you will be eligible for personal loans from most banks. However, these rules are often not very rigid; you can still talk to your lender for a personal loan even if you don’t fall into this criteria.

4. Credit score: Your personal-loan application approval depends a lot on your credit score. Your credit score reflects your debt-repaying habits; so, if you have not been regular in paying your past debts, there is a chance that your loan application could be rejected. Make sure that you first check your credit score before applying for a personal loan.

5. Running loans: If you are already in the process of repaying loans, you have to inform the bank that you apply to. The banks will evaluate your repayment capacity, and if it is satisfied, it will approve your personal loan application.

Personal loans are one of the most easiest and flexible loan options in the market. If you are a self-employed individual facing a liquidity crunch, then applying for a personal loan is probably the best way for you to secure money quickly.

Disclaimer: Copyright Kotak Mahindra Bank Ltd.