Looking for some extra cash to cover unexpected expenses or consolidate high-interest debt? A 12-month personal loan allows you to borrow money for a year with flexible EMI options. Generally, these short-term loans comparatively have higher interest rates than long term loans but require less lengthy commitments than longer-term alternatives.
Explore the details of a 12-month loan to help you determine if this option would fulfil your short-term financial requirement.
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When availing of a 12-month personal loan, the interest rate and fees are two critical factors to assess. Personal loans can carry comparatively higher interest rates because of the short tenure. Here is the outline of the interest rates and charges for a 12-month loan:
|11.99%* p.a. onwards
|Starting from ₹10,000 to ₹15 Lakhs
|Up to 4% of the loan amount
12-month personal loans come with certain eligibility requirements you must meet to qualify. Lenders mainly assess your creditworthiness and income level before approving your application. Here is a general highlight of the eligibility for a 12-month loan:
Age: Between 21-60 years old.
Residency: Borrowers must be Indian residents.
Employment: Salaried employees and self-employed individuals can apply.
Income: Minimum monthly salary must be ₹15,000.
Credit Score: A credit score of above 750 is required.
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Lenders will request documentation to verify your identity, income, employment, credit health, and other financial qualifications. Hence, having the right documents ready will make the application process faster and simpler. Here is a list of documents that you need to submit:
Proof of Identity: Government-issued photo ID like an Aadhaar card, Passport, or Voter ID.
Proof of Address: Valid address proof such as utility bills or rental agreements.
Income Proof: Documents like salary slips, bank statements, or income tax returns.
Calculate the EMI for your personal loan with ease using the EMI calculator. Just enter the loan amount, rate of interest and loan tenure (in case of 12 month loan it is 12).
12-month loans can be a good option for borrowers who need to finance a smaller expense or who want to improve their credit score. Here are some of the features and benefits of availing a personal loan for 12 months:
Fixed interest rates: 12-month loans typically have fixed interest rates, which means that your monthly payments will stay the same for the entire term of the loan. This can help you budget more easily and avoid surprises.
Predictable repayment schedule: With a fixed interest rate, you can easily calculate your EMI and create a predictable repayment schedule. This can help you stay on track with your loan payments and avoid late fees.
Shorter loan term: 12-month personal loans have shorter loan terms than other types of loans. This means that you will pay off your loan faster and pay less interest overall.
Easier to qualify for: 12-month loans are easier to qualify, especially if you have a good credit history. This is because lenders are more likely to approve a loan with a shorter term.
Good for smaller expenses: 12-month loans are a good option for financing smaller expenses, such as unexpected medical bills, car repairs, or home improvement projects.
Follow the step-by-step guide to apply for a 12-month personal loan:
Step 2: Open the Personal Loan Application Page. Enter your mobile number and OTP.
Step 3: Specify loan amount and personal email address.
Step 4: Input your professional and personal details.
Step 5: Provide your communication address with income details, and click 'Submit’.
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When you avail a personal loan, you commit to repaying the borrowed amount plus interest charges over the tenure. Find out the typical methods offered to make a decision on how to set up personal loan repayment for your 12-month loan.
Here are some common methods for repaying a 12-month personal loan:
Equal Monthly Installments (EMIs): The most typical structure breaks down your total loan amount into 12 equal monthly payments over the 1-year term. EMIs create predictable, fixed payments.
Payroll Deductions: Some lenders allow borrowers to make loan payments automatically via payroll deductions from their salary. This can simplify payment tracking.
Checks/Cash: Manual payments can be made monthly by providing the lender with checks, cash, or money orders matching your owed EMI or total balance.
Automatic Bank Debits: You can authorize the lender to debit your bank account every month to collect your installment amount. This automates payments.
Over-the-Counter Payments: Take your EMI amount in person to the lender branch each month and make cash/check payments over-the-counter.
Online Transfers/Bill Pay: Utilize your bank/financial institution's online bill pay and money transfer options to pay installments.
Early Lump Sum Payoffs: Those wanting to repay early can pay the entire outstanding principal in a lump sum ahead of schedule to close the loan.
Requirements typically include a minimum credit score of 750, minimum monthly income between ₹15,000, and age of 21-60 years.
Maximum interest rates start from 11.99%* p.a. but may vary by lender depending on your creditworthiness.
Loan amounts usually range from ₹10,000 up to ₹15 lakhs. Your personal eligibility determines the approved loan amount.
If repaid on time monthly with no defaults, it may improve your credit score. Late payments can negatively impact your score.
No, 12 month loan terms cannot be extended typically. You must repay the balance owed in 12 months through EMIs.
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