Unlike a secured loan, a personal loan allows you to borrow money without having to pledge collateral. For those who do not want to risk pledging their assets with secured loans, a personal loan is one of the most popular options. A personal loan offers a significant amount of funds to the borrower over a short repayment period of 1 to 5 years. The loan amount can be used for various financial objectives such as a wedding, higher education, home renovation, business or professional endeavours, an overseas holiday, medical emergencies, or consolidation of high-interest debt, among others. Read on to know more about personal loans and where to get a personal loan.
Many banks, non-banking financial institutions (NBFCs), online or offline money lenders, pawnshops, or even your family and friends can give you a loan. However, the best place to get a personal loan is at any trusted and registered bank or NBFC. Lenders like these are reliable. They take care of the entire loan procedure and charge competitive interest rates for the repayment of the personal loan. The lender loans the borrower the desired amount based on contractual terms stating how much and when the borrower will repay the loan. The borrower has to pay the borrowed or principal amount along with the designated interest rates charged by the lender.
The biggest benefit of a personal loan is that it is collateral-free. The borrower does not need to pledge a personal asset like a vehicle, home, or life insurance policy to avail of the loan.
You can use personal loans for various lender-approved purposes. Whether you want to use the money for a wedding, higher education, a vacation/ holiday, home renovation, medical reasons, debt repayment/ consolidation, or business/ professional purposes.
Personal loans have a short repayment tenure ranging from 1 to 5 years. Short-term loans can remove the hassle of long-term repayments and improve your credit score if you pay the EMIs on time. Some lenders even go out of their way and offer extra benefits like:
As short-term loans do not require any collateral, the lender will verify only a few standard documents, including those that confirm your identity, address, employment, and income status. The eligibility criteria are also kept minimal to make the process hassle-free.
Personal loan interest prices can soar if you are not careful. The lenders who have your best interest at heart will always offer personal loans at affordable and competitive interest rates - as opposed to skyrocketing interest rates.
While some lenders may levy charges for closing a loan before its tenure, many lenders such as Poonawalla Fincorp do not levy any charges for prepayment or foreclosure of a loan.
Not anyone can apply for a personal loan. You have to fulfil certain eligibility criteria and possess the desired documents to get a personal loan. To be eligible for a personal loan, you
The documents required to process a personal loan application include
The interest rates of personal loans vary from lender to lender. However, the standard interest rate starts from 10% per annum and goes up to 15% to 20% per annum. You can choose between fixed and floating personal loan interest rates. Going by the name, interest rate in case of a fixed personal loan remains the same throughout the tenure.
A floating interest rate changes depending on the financial market and can increase or decrease. If you do not like taking risks and wish to maintain stability in your repayments, a fixed interest rate is for you. But if you are okay with dabbling in some risk with the hope of lowering your interest charges, then you can choose the floating interest rate.
However, there is always a risk of interest rates going higher than what you signed up for at the time of taking the personal loan. Apart from the interest charges, there are other charges to a personal loan. These include loan processing fees, late EMI payment penalties, and administrative charges depending on the lender.
Now that you know where to get a personal loan, you must understand how to apply for one. You can apply for a loan online in a few simple steps or offline. The offline process can take a few days, but the online loan procedure is quick, easy, and uncomplicated. You can save time, money, and a lot of effort by choosing to apply for a personal loan online. In fact, most banks and NBFCs have the personal loan application process online because it saves them time as well. To apply for a personal loan, all you have to do is:
1. Visit the lender’s website and select the ‘Personal loan’ option
2. Click on apply now and enter the details requested, including
Once you submit these details, you will get the EMI amount payable for the tenure with a perfect breakup of payments. After that, you will have to submit the documents mentioned above, undergo a KYC process, and wait for the lender to verify your submitted application and documents. On verification, your personal loan gets approved, and you receive the loan amount within a matter of minutes or hours.
You can get a personal loan anywhere – but in matters of finances, it is wise to go for the securer, more reliable option. Pick a lender that you can trust and build a long-term relationship with to aid your wealth journey.
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