Last Updated on June 10th, 2016

You have some urgent money requirement and don’t have much cash with you. What are your possible options? You can either borrow from your family or dip into your savings. Family and friends might not be able to help you out every time. And you might not want to withdraw from your savings as it is difficult to accumulate money again.

If that’s your situation, then you can consider taking a personal loan. These are unsecured loans offered to applicants after assessing their credit history and loan repayment capacity.

Obviously the personal loan interest rates are higher than those of secured loans, as personal loans are unsecured in nature. This is a very important factor to keep in mind before applying. More the interest rate, higher will be your monthly EMIs.

So how to get a personal loan?
The first thing to be ascertained is the amount of money you need. This is easy as you are the best judge of your requirement. Make sure to borrow as less as possible, as you will have to pay interest on the amount.

Once you have a clear idea of your requirement, you need to see whether you are eligible to borrow the amount or not.

This can be done by checking the various eligibility criteria set by probable lenders. Lenders do not lend if you already have EMIs that take up 40% of your monthly take home income. Another criteria is that since this is an unsecured loan, lenders only have your credit-worthiness as a collateral. Interest rates too are negotiable and depend on your credit score. So do check your credit score to see whether your credit history is good enough for getting a low rate or not.

Next is to get in touch with as many lenders as possible and check their offers. It’s best to go for the lender that offers you the lowest interest rate. You can also apply for loan online and see whether you can get a better deal there.

Once you apply for the loan, the lenders will ask for the documents supporting proof of income, residence and identity. You will also be required to produce copies of income tax returns, salary slips, bank statements, etc. The documentation requirements vary from lender to lender.

Once the loan application is processed by the lender and found to be good on parameters like credit worthiness, repayment capacity, etc., the loan will be sanctioned and disbursed to you.

Taking a personal loan can help you get over temporary cash crunches. But use personal loans with care and only to the extent you can comfortably service the EMIs.