What is the Minimum Personal Loan Amount I Can Take?

When someone needs money right away, a personal loan can help. No security is needed for these loans. Personal loans are based on income, credit score, and ability to repay the loan. The average minimum amount of personal loan that a person applies for is around Rs. 10,000 in most banks. This article will discuss how much people can borrow when they get a personal loan including the minimum loan amount for a personal loan.

What is a Personal Loan?

Personal loans are quick instalment loans between Rs. 1,000 and Rs. 50,000. Personal loans are easy to get because they do not need any collateral. There are payment plans that range from one to ten years. Personal loans do not have to be used for something specific. Personal loans have fixed interest rates, so people do not have to worry about them changing.

Personal loans work the same way as credit cards. Personal, financial and loan-related information will be checked during the process. Before the lender agrees to give the loan, the borrower’s credit will be checked in depth. The lender will decide on the interest rate, the size of the loan and the terms. If a person’s finances and credit score are good enough (usually in the mid-700s) they can get a personal loan quickly.

Why is the Minimum Amount of Personal Loans Important?

Firstly, the person must decide on the minimum amount of personal loans they are applying for. When a person is in financial need, just a small loan amount could help. In an age when technology is rapidly improving, people should look at all the personal loan options available and decide which one is the best for them.

Tenure, Maximum and Minimum Amount of a Personal Loan

Most personal loans under Rs.10,000 are considered small. Small personal loans cannot be more than Rs. 2,00,000. Some lenders provide personal loans of Rs. 5,000. Most lenders offer loans for three months with a maximum length of two years. Other lenders provide 15-day small personal loans.

Most banks and other financial institutions offer personal loans of at least Rs. 50,000. Fintech companies and platforms for getting loans have grown. It lets people get loans from Rs. 5,000 to Rs. 50,000 which are easy to repay. By opting for these loans, people can avoid the high interest rates charged by less established moneylenders.

How To Apply For a Personal Loan?

1. Decide on the personal loan amount that you will be applying for.
2. Go through your financial records and check for any existing loans or credit cards you may already be repaying. This will help you figure out how much you can afford in EMIs. If it helps, use the personal loan eligibility calculator to determine how much you can pay back in a month.
3. Look at the bank’s requirements to see if your income matches the amount they need.
4. Find out how much the bank charges as interest for personal loans. 
5. If you are a new customer, you can get the application from the bank’s website or at the nearest bank branch. If you already have an account with the bank, there may be some concessions, which you should find out about.
6. Submit the application form, all required documents and the processing charges.
7. The bank will check the documents, let you know how much you can borrow based on what you are eligible for, and approve the loan.
8. After that, the money is sent to your account. The whole process could take up to 30 days.

Documents Required

These are the documents required for a small personal loan:

• Documents to verify your identity and age (voter’s ID, passport, Aadhaar card or PAN card)
• Documents to verify your income (pay slips for the most recent 3-month period, IT returns or others)
• Statement from your bank (6-month statement)
• Photos
• Other documents

Personal Loan Benefits

There are many advantages to personal loans including:

• One Sum

When someone gets the loan amount all at once, it is easier to make a big purchase or use the money for its intended purpose. The loan is easier to manage when the interest rate and monthly payment are set.

• Rapid Financing

Personal loans are good for unexpected expenses because they are easy to get and pay back. The money from a personal loan could be in the applicant’s bank account the next day.

• No Collateral

Personal loans with no collateral are unsecured. A person does not have to put up a car, house, or other valuables as collateral to get a personal loan. This makes it easier for people who need quick and easy finances without having to place their valuables on the line.

• Low Interest

Personal loans have lower rates than credit cards. In July 2022, the average rate for a personal loan was 10.28% and the average rate for a credit card was 16.80%. Personal loan rates for people with good credit range from 10.3% to 12.5%. 

• Adaptability

Some loans come with rules. For example, people can only buy a car with an auto loan. But personal loans can cover medical costs or consolidate debt. There are no restrictions on what the borrower can use the personal loan amount for and this allows flexibility in its use.

• Loan Extensions

Personal loans last between 2 and 10 years, depending on the lender. So, a person will have a fair monthly payment and enough time to repay their loan.

• Easy Handling

Personal loans can be easier to manage than credit cards. Many credit cards are harder to manage than personal loans with fixed monthly payments. Interest rates, due dates and other aspects of credit cards differ from personal loans.

Conclusion

Learning about the maximum and minimum amount of personal loans can help people decide if they need to apply for a personal loan. Before applying for a personal loan, people should plan how they will use it and how they will pay it back. One should also look at personal loans alongside other ways to borrow money. Piramal Finance provides more information like this blog on minimum loan amounts for a personal loan and many other related topics. Visit the Piramal Finance website to compare the rates and terms of personal loans.