Personal loans
Some expenses in life are unprecedented, and they may arise at any point in life. Other times, you may require funds for a significant life change. In any case, it is only partially possible to keep up the availability of adequate funds at all times. So what can one do to keep up with these demands? Thankfully, personal loans have the right answer for these scenarios. This blog will take you through all the essential details about personal loans and why they are so popular.
What is a personal loan?
The most widely used definition of loan implies a borrowed sum of money paid back over time with interest. Over the years, banks and financial institutions have developed specialised loan plans for different financial needs. However, some uncategorised expenses aren’t always recognised but have necessary significance in life. These can be paid for by availing of a personal loan. A personal loan is an unsecured loan that offers monetary support to help people pay for personal expenses. They are named “personal” loans due to their flexibility in providing financial security across several domains.
Personal loans differ from other types of specialised loans for a variety of reasons. We shall look into the details of these highlighting features in the forthcoming sections. However, you can be assured of enjoying several perks by getting a personal loan compared to a specialised loan.
Personal loan plans have proven more financially beneficial for those needing additional monetary support. They offer freer discretion of use and can be easier to manage and repay. It also helps users pick favourable terms of interest rate, payback tenure, EMIs, etc.
Types
As mentioned before, personal loans cover an extensive range of expenses. While the borrower can use the sanctioned loan amount whichever way they like, there are different types and categories even within such costs. Based on the most popular reasons for securing personal loans, the subtypes within these loans are as follows.
- Wedding loan: Everyone wishes to make their wedding day grand and monumental. However, the rising inflation may make it difficult for some people to fulfil these dreams. Wedding loans help you make your dream wedding come to life without burdening your wallet.
- Travel loan: Planning a luxurious and exquisite vacation demands heavy financial investment. You may take advantage of a travel loan to make memorable travel memories without stressing about expenses.
- Home renovation loan: Keeping your home brand new and equipped with the latest furnishing facilities requires heavy funding. Protect such expenses by getting financial security for your home renovation procedures.
- Medical emergency loan: Medical emergencies are often unprecedented and overwhelming. However, you can battle the high prices of treatment and medicines by availing of financial assistance.
- Consumer durables loan: Consumer durables refer to large-sized goods with a relatively long duration period. Since these products are more oversized and have a higher market price, they make for a heavy purchase. Support your shopping experience by having a monetary safety blanket.
- Festival loan: Festivals are supposed to be a time of joy and happiness. With additional monetary support, you can have a memorable festive season without any extra worries.
- Small personal loan: As the name may indicate, these loans are acquired for the more minor and more minute expenses that aren’t too pricey yet hold significance.
- Education loan: Whether you wish to pursue higher studies or want to fund your child’s educational needs, you can do so by availing of personal education loans.
How does it work?
Since personal loans work differently from other specialised loans, knowing more about their functioning and uses is essential. In this section, we will discuss the expected features and working highlights of the loan.
- The loan amount offered heavily depends on the borrower’s employment type and history, monthly net income, and credit score. Hence, the sum acquired from a personal loan will depend from person to person.
- Since personal loans are unsecured, you do not have to provide collateral for the borrowed money.
- While the loan is repaid in equated monthly instalments (EMI), the tenure and interest rate depend on the applicant’s financial record.
- The repayment term is decided based on your credit history, rate of interest, and the sum of money borrowed.
- The applicant receives the loan sum as a direct deposit in their account, which they can withdraw and use at any time at per discretion.
Eligibility
The proposed eligibility criteria for different financial facilities differ across institutions. However, some general qualifying points for getting a sanctioned personal loan are as follows.
- Age range must be from 21* to 60 (*maybe 18 in some cases)
- Proof of Indian residency
- A credit score of 750 and above
- 2-5 years of professional experience (differs for salaried applicants)
- Minimum monthly net income starting from Rs. 25,000 for employees in public, private and MNC sectors
- Appropriate KYC documents and relevant bank statements
Be sure to consult with your respective provider to know about any modification in their rules and qualifying criteria.
When should you apply for a personal loan?
times now are full of uncertainty. The ever-increasing inflation rates are also an additional factor of stress for all. In such circumstances, people may look for different sources of monetary assistance. Personal loans cover all emergencies and extend additional financial support for other life expenses.
There is no one-size-fits-all answer regarding when and how to apply for loans. It is a highly personal and contextual decision which depends on individual needs. Based on recorded data and observations, people apply for personal loans in the following situations.
- Starting a new professional venture
- Making a significant change in your personal life (as discussed in the types of loans)
- Clearing any pending debts or loans
- Making down payments for a substantial investment
- Availing better facilities and goods for yourself
- Enhancing your flow of income
It would be best to stay mindful and informed about your decision to undertake loans for any reason. Deciding to get financial assistance requires a serious commitment you mustn’t take lightly.
How can Credvisors help you make an informed choice?
By now, we know all there is to know about personal loans and what they entail. However, applying theoretical knowledge may only sometimes work when you try to get a loan. But you need not worry! Our Credvisors are available to assist you on your financial journey. Our team offers a comparative assessment of monetary facilities and customised financial customisation services. Several users recommend our help for the following features:
- Getting instant quotes that help you save time and effort
- Hassle-free application process
- At-home documentation and consultation for maximum client satisfaction
- Assured privacy of shared data and information as per user consent
- World-class financial advice from qualified and experienced specialists