What is Small Personal Loan and How to Apply for It Online
Mr. Kapoor is going through a monetary crunch and looking for a small amount to handle a medical emergency. However, he also does not want to fall into a debt trap. In such a situation, the ideal solution for him would be to opt for small loans to meet his urgent requirements.
Are you wondering what a small personal loan is? Read on to know!
Features of Small Loans
These loans are unsecured in nature and come with no end-use restrictions. The borrower does not need to pledge his assets as collateral to obtain funds, and the money can be used to meet any kind of financial requirement. Apart from these aspects, here are some additional features and benefits you should know about these small cash loans:
- The processing fee is nominal in the case of small personal loans. However, before selecting a lender, it is wise to compare the charges levied by different loan providers.
- The approval and disbursal process doesn’t take much time. Therefore, you can rely on this type of credit during a financial emergency.
- It requires minimal documentation, which makes it less time-consuming and hassle-free.
Eligibility Criteria and Documents Required for Small Loans
No matter how small the amount is, it is mandatory for applicants to meet certain basic eligibility parameters to avail of such loans. Here are some requirements:
- The applicant needs to be an Indian resident.
- The age should be at least 21 years when he/she is applying for the loan.
- Both salaried and self-employed individuals can apply for instant small personal loans. However, the document requirements might differ.
- For salaried applicants, the minimum monthly income should be Rs. 10,000.
- Applicants must have a valid government ID to be eligible for this.
If you are meeting all these aforementioned eligibility criteria, it is time for you to prepare all the necessary documents. Here is a list of documents you will have to submit for availing of a small amount of personal loan:
- ID proof: You can submit your Aadhaar card, voter ID card, passport, etc.
- Age proof: Submit passport, Aadhaar card or driving licence to validate this.
- Passport-size photographs
- Income evidence: For this, you can submit your income declaration statement, latest salary slips (last 3 months), or last year’s ITR.
In addition, you need to submit your bank statements (past 6 months. Note that both the eligibility criteria and document requirements generally vary from one lender to another. Since this is an unsecured loan, your credit score will play a significant role here. The lender will check your repayment track record. Make sure you have a credit score of 750 or above to get prompt approval.
However, you also need to meet these basic parameters and thoroughly check what else your preferred lender is looking for before you submit your application.
How does The Repayment of Small Loans Work?
Meeting the lender-specific requirements is not enough; you should also set a proper repayment strategy beforehand to avoid default on loan repayment. As mentioned earlier, financiers offer personal loan interest rates based on your credit profile. There is enough flexibility in terms of the repayment tenure. You can choose a period of 1-5 years when applying for small cash loans online.
You also get the convenience to prepay the loan before it expires. However, look out for the charges associated with it.
To find the flexible repayment terms on your personal loan, it is extremely important to compare different lending institutions. Therefore, when you search “small cash loans near me”, make sure to open multiple links, go through the details and draw a comparison before settling for one!
With Navi, you can expect affordable interest rates and other facilities as well. The cash loan disbursal process does not take that long, which makes it an ideal option during financial emergencies. On top of that, the paperless process saves you from unwanted hassles.
Also Read
You can follow this simple procedure to apply for small personal loans at Navi:
- Step 1: Open the Navi app to begin the process.
- Step 2: You need to select the loan amount first. Note that Navi enables you to choose your equated monthly instalment amount.
- Step 3: Once you are done with this, go ahead and complete your KYC verification. For this, you will have to submit your Aadhaar and PAN information. Relevant documents should also be shared with the financier to verify your identity.
- Step 4: After verification, you can expect the funds to be disbursed within a few hours to a few days, depending on your eligibility.
Even though you will be obtaining a small amount, it is still advisable to compute what your monthly obligations will be to smoothly manage your finances.
Generally, while going through a cash crunch, individuals often fail to maintain all their financial liabilities and end up missing or delaying in making EMI payments. This inevitably leads to a poor credit score and impacts the repayment track record. To avoid this, make sure to evaluate monthly instalments beforehand using Navi’s personal loan EMI calculator and plan accordingly.
Final Word
Apart from learning about the application procedure for small loans, you should also know the terms and conditions. Some lenders mention specific details, such as foreclosure charges, pre-payment charges, etc., on their websites. Make sure to go through them before availing of financial assistance.
FAQs
Ans: When you default on your personal loan repayment, your lender will charge a penalty for the delay. Apart from this, defaulting can have negative consequences on your CIBIL score. Keep in mind that a poor CIBIL will cause problems when trying to avail of loans in the future.
Ans: With several lenders in the market, a borrower must keep in mind the following factors while looking for the best option:
• Loan processing charges
• Foreclosure expenses
• Tenure flexibility
• Eligibility parameters
• Documents required
Ans: You can determine the exact principal amount available by using a personal loan eligibility calculator. This online tool requires you to enter your city, employer, monthly earnings, and expenses. After entering these details, the calculator shows how much loan amount you can avail yourself of.
Ans: To improve your credit score, you need to repay your existing dues in a punctual manner. Apart from this, maintaining a good credit mix, consisting of secured and unsecured loans, can help too. You must also check your credit report for mistakes from time to time.
Ans: You can convince your lender to provide a small personal loan even when your credit score is low. However, be ready to shell out higher interest charges for the same. Alternatively, you can opt for such credit with a co-borrower.
Before you go…
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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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