How can you use a personal loan amount for home improvement?

Personal loans are available to borrowers for any number of home-related projects, including but not limited to new flooring, new paint, new tiles, an upgrade, a renovation, an improvement, an extension, etc. Personal loans for home renovations can be used for any number of home-related projects. Numerous financial organisations provide customers with the option to obtain loans that are tailored exclusively for home improvements.

What is a personal loan?

Personal loans are forms of unsecured borrowing that financial institutions give to people based on things like their employment history, payment history, income, line of work, and credit score. A personal loan, which is sometimes called a “consumer loan,” is a flexible way to borrow money that can be used for almost anything that has an immediate and important effect on your finances.

One of the best things about getting a personal loan to pay for home improvements is that the monthly payments, or EMIs, are easy to handle. The length of the contract can be anywhere between 12 and 60 months. The monthly payment will be based on things like the interest rate, the costs of setting up the loan, and the total amount of the loan.

If the borrower pays back the loan in full before the end of the agreed-upon term, no more interest or fees will be charged.

Why choose a personal loan for home renovations?

There are many ways to pay for the home improvement project you want to do. But if you need money quickly, your best bet is to get a personal loan instead of using a credit card or some other form of credit. Personal loans give you a level of stability that you can’t get with a credit card. Most credit cards have very high-interest rates, while the rate of interest on personal loans is set from the start. Even if you choose to pay in instalments, the amount of the instalments will not change while you are paying them back.

What are the benefits of a personal loan?

1. Digitalised Since the whole transaction takes place online, there is no need for any paperwork or for the people involved to meet in person. With the rise of digital technology, everything has become much more efficient and easy to use.
2. Flexible TenureYou can decide how long you will have to pay it back. There are a lot of different ways to pay back the loan. It could take anywhere from six months to sixty months.
3. Multi-purposeA personal loan can be used to pay for a wide range of things, such as a wedding, a vacation, new furniture for your home, unexpected medical bills, and many more.
4. Zero CollateralBecause personal loans are considered unsecured loans, it is not necessary to put up any collateral to obtain one of these loans.
5. Minimum DocumentationMost of the time, you only need a few pieces of documentation to apply for a personal loan. To get a personal loan, you need things like a PAN card, an AADHAR card, and bank statements.
6. Instant DisbursalIf you are granted a loan, the funds could be sent into your bank account anywhere from 24 to 48 hours after approval.

How to apply for a personal loan for home renovation?

Here are the eligibility criteria that need to be followed for a personal loan.

• You should be an Indian citizen.
• You should be between the ages of 21 and 60.
• You should have a monthly income of at least INR 20,000.
• Your credit score should be more than 750.
• A minimum of one year of work experience is required.

Before applying for a personal loan, there are a few things to consider about.

1. Valid DocumentsFor KYC Verification, you need to have all of your documents, like your AADHAR Card, PAN Card, and bank account information, ready. If you don’t send the right paperwork, your application will be turned down.
2. Criteria for eligibilityBefore you can get the loan, you must first meet the requirements listed above.
3. The ratio of debt to incomeThe debt-to-income ratio is the number of your monthly debts as a share of your monthly gross income. It helps show that the borrower has enough money to pay back the new debt.
4. Rates of interestTo make sure you get a loan with low-interest rates, you should look into the interest rates offered by different lenders.
5. Score for creditFor your loan to be approved right away, your credit score needs to be at least 750. Also, you are more likely to get a loan with a low-interest rate if you have a good credit score.
6. Income Every MonthSince there is no collateral for a personal loan, the lender will expect you to have a stable job with a fixed income of at least INR 20,000. Once you show the lender that you have a stable income, the loan is approved right away.

What are the various documents required?

For salaried workers, you’ll need the following documents.

• Proof of Identity: AADHAR Card, PAN Card, Driver’s License, or Passport
• Proof of Address: Passport, electricity bill, water bill
• Proof of Income: Bank statement for the past six months (salaried)
• Work Experience Employment: Certificate for 1 year experience

For self-employed people, proof of income is needed as:

• Bank statement for the past 3 months
• Balance sheet and profit and loss statements audited by CA for the past 3 years.
• Salary slips for 3 months
• Income Tax Returns for the last 3 years

Final Thoughts

When you are short on time and need cash quickly, personal loans are the best way to pay for home renovations. If you want to apply for a personal loan without hurting your current financial situation, you need to keep the above things in mind.

If you don’t know where to start or if you have questions about the procedure, you should consult a financial professional like Piramal Finance to find loan options that are tailored to your specific need.