What are Pre-Approved Personal Loans? Everything You Need to Know

Financial independence is not a choice but a necessity. It can help you gain control over your finances and manage it in the long run. Having a good sense of financial management is very helpful for your future and financial goals. In this context, when you want to make a big-ticket purchase, or plan a vacation, have a wedding to fund, or education expenses for your child, asking for instant cash from family or friends can be tough and at times puts a dent in relationships. In this case, a personal loan can be a very helpful financial tool for individuals. Read this blog to learn how a personal loan can be helpful for your financial independence.

Understanding the importance of financial independence

Now, what is financial independence? Financial independence is a state of mind where you are free to take financial decisions without relying on anyone for money. This helps to stay in control of your money, without being asked for money from your close ones. It boosts your confidence and enhances your financial condition over time.

How can a personal loan help you gain financial independence?

Here’s how you can use a personal loan for financial independence:

• Flexibility in usage
  A personal loan provides the flexibility to use the funds for various purposes, such as consolidating debt, covering medical expenses, funding education, or making a significant purchase. This versatility allows you to address immediate financial needs without depleting your savings, giving you greater control over your finances.
• Consolidation of debt
  By consolidating multiple debts into a single personal loan, you can simplify your financial obligations. This can lead to lower interest rates and more manageable monthly payments, helping you reduce financial stress and focus on paying off debt efficiently. Consolidation makes it easier to track payments and stay on top of your financial commitments.
• Building credit history
  Successfully managing and repaying a personal loan can positively impact your credit score. A higher credit score opens up more financial opportunities, such as better interest rates on future loans and credit cards. Building a strong credit history is a crucial step towards achieving long-term financial stability and independence.
• Access to instant funds
  A personal loan provides immediate access to a lump sum amount, which can be crucial in times of need. Whether it's for emergency expenses or an investment opportunity, having access to a significant amount of money can help you navigate financial challenges and take advantage of opportunities without delay.
• Financial planning and discipline
  Taking out a personal loan requires careful financial planning and discipline. It encourages you to assess your financial situation, budget effectively, and ensure timely repayments. This disciplined approach to managing a personal loan can instil better financial habits, promoting long-term financial independence and stability.

Personal loan eligibility criteria

Check the standard personal loan eligibility criteria below:

• Age between 21 and 60 years.
• Salaried individuals, self-employed professionals, or business owners.
• Minimum monthly income, which usually ranges from ₹20,000 to ₹30,000.
• A good credit score, generally above 700.
• Minimum work experience in current job (usually 1 year) or in the same profession (for self-employed).
• Must be a resident of India.

Personal loan fees & charges

When considering a personal loan, it's essential to understand the associated fees and charges.

• Standard fees may include processing fees, which are a one-time charge for loan processing.
• Additionally, there may be prepayment or foreclosure charges if you decide to pay off the loan before the term ends.
• Late payment fees may apply if you miss your monthly payment deadline. Some lenders also impose documentation charges for verifying your loan application documents.

Understanding these fees and charges upfront can help you budget effectively and choose the most cost-effective loan option for your needs.

Personal loan required docs

Here are the common documents required to apply for a personal loan from a lender in India:

Personal loan eligibility calculator

A personal loan eligibility calculator can help get estimates of your monthly EMIs that need to be repaid every month throughout the loan cycle. The usage is very simple, just enter the loan amount, interest rate, and loan tenure, the calculator will give the estimated EMI in seconds.

Conclusion

Taking out a personal loan is a great tool if you are looking to get instant funds without much hassle. Financial independence is all about keeping your head high even in case of emergencies. A personal loan serves as the best option when you don’t want to ask anyone for money.

This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.