A personal loan is a short to medium term unsecured loan granted to an individual. Personal Loan is commonly used to meet such financial needs as debt consolidation, wedding expenses, unexpected medical costs, home renovation, and others. The flexibility of usage, minimal documentation, and quick processing make the personal loan a preferred financing option. Unlike other loans, it usually has a shorter repayment tenure ranging from 1-10 years. Depending upon the individual applicant’s profile and lender, the APR (Annual Percentage Rate) of a personal loan may vary from 7.0% to 13%.
For example, if you take a Personal loan of Rs. 5 lakhs at the rate of 7.0% with repayment tenure of 5 years, your EMI will be Rs. 9,901/-. The total payable amount at the end of 5 years would be Rs 6,00,536/-. Therefore, you are paying the total interest amount to the tune of Rs 94036/-. This, however, excludes other applicable charges which can be quantified as under:
Legal Processing Charge = Rs 6500
Documentation charges = Rs. 0
Amortization Schedule charges = Rs. 0
In case of change of payment mode or swapping your Post Dated Cheques, additional charges are applicable. Also, depending upon the lender bank, prepayment options may or may not be available and the applicable charges may vary accordingly.