An emergency or unexpected expense can arise at any time. Whether it’s a sudden hospital bill, unplanned wedding expense or urgent travel, an emergency Personal Loan can be a reliable financial solution. In this blog, let’s understand how they work and how to use them wisely.
What is an Emergency Personal Loan?
An emergency Personal Loan is a type of loan designed to fulfil your urgent needs. Offered by various financial institutions, this loan is known for its quick approval and disbursal, minimal paperwork, and no collateral requirement.
Benefits of an Emergency Personal Loan
Here are some benefits of using an emergency loan for personal use:
1. 100% Digital
Most lenders offer a completely digital application process. Where you can apply for a loan online, upload documents, keep track of your application and get the funds in your bank account without visiting the bank.
2. Minimal Documentation
Applying for an emergency loan is often hassle-free. Just submit your KYC documents, income proof, and it's done. This makes the whole process straightforward, especially when you are running out of time.
3. No Collateral Requirement
Many lenders offer unsecured emergency loans, meaning you don’t have to keep anything as collateral. And by doing so, it reduces the risk and speeds up the loan process.
4. No End Usage Restriction
Unlike some specific loans, an emergency Personal Loan can be used for any urgent needs. Whether it is education fees, medical bills, house repairs, etc.
5. Quick Access to Funds
The loan is tailored to help you meet your emergency financial needs on time. By offering an instant application process and approval in no time, they are ideal for your urgent needs.
How to Apply for an Emergency Personal Loan
Applying for an Emergency Personal Loan is simple. Here is what you must do:
Step 1: Check Your Credit Score
Before you start your research and application journey, check your credit score. Your credit score influences your loan amount and interest rate. Generally, a score of 720 and above is preferred by the lender as this score shows that you are a less risky borrower.
Step 2: Compare Lenders
Do your research, check different lenders and their interest rates, eligibility criteria, processing fees, disbursal time and prepayment or foreclosure charges (if applicable).
Step 3: Gather Documents
Once you have selected the lender, gather all the documents required by the lender. These documents may include KYC documents such as Aadhaar card, PAN card, income documents and address proof.
Step 4: Apply Online
The next step is to start the application form online. Fill out all the required details, such as personal and financial information, and then upload the documents you have gathered as per the lender’s requirements to support your application.
Step 5: Wait for Verification and Disbursement
Submit the application form and wait for the lender to verify your details. Once verified, the loan amount will be disbursed to your bank account.
Things to Consider Before Applying for an Emergency Personal Loan
As the name suggests, it’s an emergency Personal Loan where you cannot make any mistakes. Here are a few things to consider before you apply for a Personal Loan for any emergency:
- Interest Rate: Check the interest rate offered by different lenders to choose the one that best suits your needs.
- Repayment Terms: Make sure you go through the loan agreement properly to understand the repayment terms and EMI amount before you sign.
- Fees & Penalties: Look for the hidden charges and prepayment or foreclosure fees. So that might not come as a surprise to you later.
Tips for Managing Loan Repayment
Getting a loan is just the starting point; how you manage and repay it comes after that. Check out some tips to manage your loan repayment:
- Set up auto payment mode so that you don’t miss any EMI.
- Borrow what's needed to keep the EMIs affordable.
- Repay the loan amount early if you have extra funds.
- Stay in touch and convey to your lender if there is any delay in repayment.
To Conclude
An emergency Personal Loan can be a lifesaver in difficult situations if you borrow responsibly. When planning to apply for a loan, you must compare the lenders, understand their terms and conditions clearly and then choose the loan amount that suits your budget and repayment.
When planned correctly, you can handle the situation without any stress.
Frequently Asked Questions
Is collateral required for an emergency personal loan?
No, emergency personal loans are unsecured and do not require any collateral.
How do I apply for an emergency personal loan online?
Visit the lender’s website, fill out the application form, upload
documents, and submit for verification.
What is the interest rate on emergency personal loans?
Interest rates vary by lender and credit profile, typically
ranging from 10% to 24% annually.
Can I prepay my emergency Personal Loan?
Yes,
many lenders allow prepayment but check for any applicable charges.
We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply
