We all know what loans are, right? Now, when the bank lends you money for personal needs like taking a holiday, or paying your medical bills, it’s a personal loan. While availing these is easy, there are certain benefits and trade-offs associated with a personal loan. Let’s check out all that you need to know about personal loans.
A personal loan is money borrowed from a bank, NBFC or any other financial institution for a pre-given period of time. This borrowed sum has to be paid back in regular monthly installments ,within this decided repayment tenor which can range from 12 to 60 months.
You will also have to pay a certain interest on the borrowed sum. Depending on the lender you pick and your credit profile, the applicable rate of interest can range from 8.90%-49%. Unlike a car or home loan, a standalone personal loan is unsecured. This means that you won’t have to put down collateral to avail of the loan. Since the risk of sanctioning a personal loan is greater for the lender, the interest rate tends to be on the higher end.
Once your loan application is accepted, you can withdraw the entire loan amount or make small withdrawals as per your needs. However, it should be noted that monthly EMI payments for the loan will start from the month following its disbursement.
As the name suggests, you can use a personal loan to finance your personal needs. There aren't any end-use restrictions when it comes to personal loans. In other words, you can use the sanctioned loan amount as per your needs.
While NBFCs and banks offer easy personal loans, there are still certain eligibility criteria you must meet to qualify for such loans. While this list varies from one lender to the next, here’s a brief overview of eligbility - Age: Most lenders issue personal loans to applicants aged 21-65 years. Some lenders fix the minimum age slab at 18.
To apply for a personal loan, you will require the following set of documents:
With the easy availability of credit today, you can avail of personal loans through traditional offline and modern online channels.. Ideally, you should start looking for a personal loan from your current bank or NBFC.
Lenders often extend pre-approved loans with preferential rates to their loyal customers. You can check with your current lender to see if you qualify for any such offers before looking for a personal loan elsewhere. Doing so will also help you save time on submitting extra KYC documents and waiting through the verification stage.
With the growing demand for such loans and the advancement of technology, applying for a personal loan has become relatively easy.
While traditional offline channels may still exist, applying for a personal loan online is definitely more convenient. You don’t just get to ditch the chore of visiting an offline branch office but also enjoy the convenience of a paperless documentation process.
To make things easier, our EMI calculator will show you exactly how much you need to repay every month, depending on the loan amount, tenure and interest rate.
A personal loan is a loan taken from a bank or NBFC to meet personal needs. This amount is borrowed for a certain predetermined period against an applicable interest rate and must be paid back in monthly instalments within this tenor. Most personal loans tend to be unsecured with no collateral requirements.
Loans taken to fund weddings, travel, medical emergency or home renovation expenses qualify as examples of personal loans. Similarly, those taken to meet higher education expenses or purchase customer durables or gadgets also qualify as personal loans.
A personal loan is often known as a consumer loan as the loan amount can be used at the discretion of the borrower
The chief risk associated with an unsecured personal loan is that defaulting on such loans can severely damage your credit score. Such damage to your credit score can make it difficult to secure loans in the future.
Personal loans have several benefits. First, by applying for an unsecured personal loan, you can enjoy freedom from the need to put down an asset as collateral. Second, most lenders now approve such loans in a matter of hours. Third, the document checklist for such loans is also basic because of the simplistic eligibility criteria. In other words, you can apply for a personal loan with minimum documents. And lastly, there’s no cap on how to use the funds
If you stop paying your personal loan EMIs, you will have to face penalties ranging from 2%-5% of the outstanding loan amount. If you eventually default on the loan, the lender will report you as a defaulter resulting in a severe blow to your credit score.
No. A personal loan can only be cancelled before the sum is disbursed and deposited into your account. However, once the money has been deposited, you cannot return it. The only available option then is to prepay the loan with an add-on penalty.
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