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What is Personal Loan? Things You Should Know
Irrespective of how efficiently you plan your finances, sometimes, financial needs occur all of a sudden and mostly when you least expect it. In such cases, you either have to resort to borrowing from friends, taking a loan or spending from your credit card. Each option has its advantages and drawback. Borrowing from friends or relatives is uncertain might strain relationships in the future. Hence, opting for a personal loan or borrowing against your credit card are two feasible options. Even from these, personal loans fair better against credit card borrowing by a wide margin. Hence, if you require funds to fulfil a personal expense, consolidate debt, ease liquidity crunch, pay for a medical emergency or any other requirement, a personal loan is your best financial recourse.
Read on to know Personal Loan meaning and Personal Loan definition.
A Personal Loan is an unsecured loan that can help you meet your current financial needs. The loan does not require you to pledge any security or collateral and is available with minimum documentation. The lump sum from the personal loan can be used to fulfil expenses, such as home renovations, marriage expenses, medical emergencies, funeral costs, etc. You can also use a Personal Loan to consolidate different debts or ease a liquidity crunch.
Unlike a credit card, a Personal Loan gives you a lump sum amount to use at once. You pay back the amount plus interest in pre-agreed monthly instalments over the loan tenure. Most people prefer personal loans as an alternative to credit cards because often Personal Loans have lower interest rates than credit cards.
Also, you can use a Personal Loan amount to fulfil nearly any kind of expense that is personal in nature, such as some of your goals, needs, emergencies, etc. Moreover, owing to the ease of online Personal Loans and the increasing competition, availing of a Personal Loan is cheaper and more accessible than ever before. In contrast to credit cards, Personal Loans are available at a fixed rate of interest for any amount you want to borrow. However, credit cards are revolving debts, where you can borrow the balance of the funds after spending per the credit card limit.
Poonawalla Fincorp does not levy any restriction on the usage of funds from the personal loan. You can use the lump sum from your personal loan as you deem fit. Here are six cases where you could use a personal loan from Poonawalla Fincorp
Money from personal loan can be used for buying new electronic equipment, such as refrigerator, washing machine, TV, AC, etc. A growing family or growing aspirations demand that appliances in the house are up-to-date and cater to the needs of everyone.
As consumers become more upwardly mobile, they prefer to have the latest smartphones in their hand. Also, smartphones have become like mini-computers / mini-laptops and a large chunk of office work is done on a good smartphone. Hence, consumers can avail of a personal loan to fulfil this need / desire.
In India, weddings are one of the heftiest financial investments. With each year, weddings are getting costlier. You can use a personal loan to finance your or your children’s wedding expenses and ensure the functions are done well.
Medical emergencies like an accident, critical ailment, serious injury, etc., often come unannounced. In such situations, financial support from a personal loan is of utmost benefit. With a personal loan, you can get the best possible treatment without worrying about finances. The lump sum from the loan can be used to pay your treatment expenses.
Education, in India or abroad, has become highly expensive. As a parent, you can take a personal loan to cover the higher education costs of your children.
Most often, people wait for sufficient funds to fulfil their dream of travel. However, life is uncertain and too short to be spent waiting for the right time. If travelling is your passion, you can use a personal loan to accomplish the goal.
Home appliances like a fridge, air conditioner, washing machine, television, etc., is important but also significantly costly. You might have to save for several months and cut down other necessary expenditures to buy these home appliances. However, if you do not have funds on hand, a personal loan can provide you with much-needed financial support. You can use the funds from the loan to buy household appliances or electronic equipment immediately.
Apart from these reasons, you can use a personal loan to cover funeral costs, moving expenses, pay credit card dues, buy a vehicle or an expensive gadget, etc. There is no restriction on the usage of personal loan money, so you have complete freedom to use the lump sum as you deem fit. You could even use the money for two or more two purposes, as per your financial requirement.
Here are some important things that you need to keep in mind about Personal Loan before applying for it
Before you apply for a personal loan, it is essential to know how much you need. If you require funds for a medical emergency or for going on a vacation, the assessment in both cases will be different. Therefore, it is critical to understand your precise financial requirements and choose the personal loan amount accordingly.
The bank or lending financial institution assess your personal loan application and sanction the loan amount. The amount of personal loan you can avail of depends on your income level, profession and lender’s assessment of your loan application. If you are a business owner or self-employed person, the personal loan amount will depend on your profit and loss statement. However, if you are a salaried individual, the lender will assess your monthly salary and credit history before sanctioning the personal loan. Apart from restricting the amount per your financial assessment, the lender also limits the maximum and minimum funding available. Hence, it is advisable to always check for the maximum and minimum personal loan funding available.
Each lender levies a different interest rate on personal loans. The average interest rate for personal loans is between 10-26% per annum. The higher the interest rate, the higher will your personal loan repayment burden. Hence, before applying for a personal loan, check interest rates across different lenders and choose one that offers the minimum interest rate.
At the time of processing the personal loan, the lender bears some charges related to the administration. Even though the amount is small, it is not added to the personal loan amount and is levied individually in the form of a processing fee. Each lender charges a different processing fee. Hence, comparing the fee across lenders is wise and applying for a personal loan from a lender that charges the lowest processing fee.
Lenders allow you to prepay or foreclose a personal loan after the expiry of a specific period. However, some lenders levy foreclosure charges on closing the loan before the pre-agreed tenure. It is wise to select a lender that charges no or minimum pre-payment or foreclosure charges.
When applying for a personal loan, choose a lender that enjoys a good reputation in the market. Assess the credibility and reliability of the loan provider before taking the personal loan. Choosing a credible lender will ensure you are secure against any legal or financial hassles that may arise during the loan term.
Gone days when applying for a loan was cumbersome. Today, personal loans are available within a click and from the ease and comfort of your home. Hence, when assessing the personal loan lender, check if they offer a contactless and simple online application, approval and disbursal loan process. Facilities like online application, direct account transfer, mobile app, digital payments, etc., assures comfort and ease.
To avail of a personal loan, you require to submit minimum documents, such as identity proof, income proof, residence proof, etc. Seek a lender that asks for a minimal hassle-free documentation process rather than a complicated one.
Personal loans are meant to fulfil your sudden or unexpected financial needs. In most cases, you would require a personal loan sum immediately or in some days. Therefore, assessing the approval time and disbursal of the personal loan is critical. Choose a lender that has a quick and easy approval and disbursement process of loan so that you can access the funds at the earliest possible.
The loan tenure has a significant impact on your monthly instalments. The longer the loan term, the lower would be the burden of the monthly instalments. Alternatively, the shorter the personal loan tenure, the higher will be the monthly instalments. Before applying for a personal loan, check the tenure specifications of the personal loan, and preferably, choose a longer loan term.
Here is the full disclosure of all interest rates and fees related to Poonawalla Fincorp personal loan
| Particulars |
Figures* |
| Interest rate |
Starting at 9.99% per annum. The exact interest rate depends on your loan eligibility, credit score, etc. |
| Pre-payment charges |
Zero pre-payment charges on foreclosing personal loan before the fixed tenure. However, the foreclosure should be from owned funds. |
| Loan processing charges |
Between 0% and 2% per profile plus taxes. |
| Late payment penalty |
Rs. 500 bouncing charge/bounce plus taxes 2% penalty on the unpaid pending interest amount, if any. |
*T&C apply. These numbers are subject to change depending on existing offers
For more details on Interest Rate and charges, please Click Here.
Eligibility criteria for personal loans from Poonawalla Fincorp are
| Criteria | Requirement |
|
Applicant age |
Minimum 24 years at the time of loan application and maximum 57 years at the time of loan maturity. |
|
Work experience |
Minimum work experience of one year with at least two months of stability with the current employer |
| Income | Minimum net salary of Rs. 30,000 per month |
|
Employer category |
Applicant should be full time employed with a company, private or public limited corporation or LLP. |
| Citizenship | Available only for Indian citizenship holders |
Here are some of the prime features and advantages of taking a personal loan from Poonawalla Fincorp are
Here is the list of documents needed to present when availing of a personal loan from Poonawalla Fincorp:
| Documents List | |
| KYC documents | PAN card Aadhaar card |
| Address proof | Electricity bill or rent agreement or Indian passport |
| Income proof | Latest monthly salary slip from the current employer |
| Bank account statement | Original bank statement for the latest three months in PDF format. |
Everything, right from the personal loan application, approval and distribution, at Poonawalla Fincorp are simple, transparent and fast.
In order to apply for Personal Loan with low interest rate, Click here. In case of any queries and to know more about Personal Loan, contact us or refer to the FAQ section on the website.
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