Multipurpose loan: How to get approved, interest rates, and required documents

Loans have become a popular choice for people who want to get temporary financial assistance to cover their expenses. A multipurpose loan is a flexible loan which enables you to borrow money without providing a specific reason for the same.

This flexibility allows you to use the funds as per your convenience which can be for consolidating debt, paying for unexpected expenses, or financing personal pleasures like vacations or buying a luxurious gift.

However, before you decide on getting a multipurpose loan, it is important to understand the key features, eligibility as well as the documents required for the application so that you can compare and get the best deal for yourself.

Key features of multipurpose loan

Quick processing and disbursal: These loans offer an easy online application process, ensuring instant approval and immediate access to funds.

Flexible loan tenure: Most lenders offer you a flexible repayment tenure usually up to seven years, through which you can easily choose your preferred tenure and pay conveniently.

Quick application process:The application process is quick and comes with minimal documentation so you can get a hassle free approval process.

No collateral required: You do not require collateral to apply for these loans. This way you can fulfil your financial obligations without putting your assets at risk.

Competitive interest rates:The interest rates on multipurpose loans are usually competitive, which helps you minimise your overall borrowing costs and compare interest rates offered by various lenders. This way you can get the best deal for yourself.

Versatile use:These loans can be used for a variety of purposes such as home renovations, weddings, education, travel etc.

Eligibility criteria for multipurpose loans

Note: The eligibility criteria may vary depending on your overall credit profile. Hence, for the latest updates visit your desired bank’s website.

Age: Usually you need to be between 21 and 60 years in order to be eligible for the loan.

Minimum income: Generally most banks require a minimum salary ranging between ₹15,000 to 35,000.

Employment: If you are a salaried individual, it is advisable to have a stable employment with a reputed organisation along with a regular salary. If you are a self employed professional, you must have a steady business.

Credit score:Good credit history increases the chances of approval and can get you low interest rates on your loan EMIs. Typically, a credit score of 750 and more is considered to be most desirable.

Documents required for multipurpose loans

Note:Banks may require additional documents based on your overall credit profile as well as the amount you require as loan.

Identity proof:

• Passport
• driver’s license
• Aadhaar card.

Address proof:

• Utility bills
• Rental agreements
• property documents.

Income proof:

• Salary slips
• Bank statements
• Income tax returns

Employment proof:Employment certificate or business proof for self-employed individuals.

In conclusion, if you are looking to apply for a multipurpose loan, then you need to know that your credit score will determine whether your loan will be approved or not. A higher credit score makes it easier to get a loan with better terms.

However, if your loan application is rejected because of a poor credit score, you may have to work on it to increase your score in order to raise your eligibility for future loan approvals.

(Note: Raising a loan comes with its own risks. So, due caution is advised)