- July 1, 2020
- Posted by: Ganeshcbani
- Category: Blog
What is an individual loan?
Simply put, it is an unsecured loan from a bank or a non-banking financial institution (NBFC) to meet their personal requirements. It is based on key factors like the amount of employment, credit and work history, reimbursement ability, etc.
In contrast to a home or a car loan, there is no personal loan against an asset. Because the creditor is unsecured and does not position collateral, such as gold or land, in case of a default, the lender can not auction anything you own. Personal credit interest rates are higher than those on house, car or gold credits due to the greater perceived risk of penalties.
However, as with all other loans, personal loan defaults are not healthy, as is expressed in your credit report and trigger issues with applications for potential credit cards or other loans.
Personal loan features and advantages
- If not more, borrow up to Rs.60 lakh. Select a loan term of up to five years and pay your loan back in simple installments.
- Send your application through online or offline channels.
- Minimum documents and paperwork needed.
- There are no limits on how the loan should be used.
- Accessible interest rates ranging from 10% p.a. And 24% a.p.a.
- Helps in debt restructuring.
- Quick approval.
- Loan offers pre-approved.
Request a personal loan online by choosing top banks’ best bid. Avail personal loan for marriages, holidays, home renovation or financial emergency.
What is the functioning of personal loans?
Like any other loan, personal loans work. You apply for the appropriate sum, request the paperwork, check the creditworthiness of the lender and provide information on the amount you will receive and the interest rate you will be charged. If you accept the offer, the money is transferred to your bank account and the money can be used for whatever you want.
The repayment is often provided by equal monthly payments (EMIs) and the EMI amount will be determined on the basis of the number, interest rate and tenure. Although this method seems simple, it needs to run around and a pile of paperwork any time you need a loan, when you go to banks or other conventional lenders.
How can a personal loan be used?
The biggest advantage of personal loans is that you can use the money as you want. If it is a wedding, a holiday, an unwelcome medical emergency or a refurbishment at home. Regardless of the situation, personal loans come handy.
Before applying for a personal loan, what do you know?
When your credit score is good, most lenders will be prepared to give you an individual loan and it can may be difficult to figure out which is the best choice.
There are three things you should learn before you take a personal loan
Rate of interest
The interest rate that you are charged is the cost of taking the loan and can substantially change your monthly installment amount. In addition, the interest rate for the entire loan term is fixed. So it will save you a lot of money if you spend some time and find the best rate.
Time of repayment
This is the time you have to pay your capital plus the interest. A shorter loan period means a lower cost, but a larger EMI. See the tenure spectrum provided by various lenders and choose the best tenure and EMI blend.
Penalty for prepayment
When you earn a year-end bonus or have extra funds, the first thing you can do is pay off your unpaid loan. The lender may, however, charge a significant penalty for the early closure. You should therefore check the pre-payment charges before applying for a personal loan.