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All You Need to Know About Personal Loans

The best way to deal with a financial crisis is by borrowing from external sources. Many banks and Non-Banking Financial Companies (NBFCs) offer loans at competitive interest rates and flexible repayment schemes. Due to the numerous features and benefits offered, loans have become a popular option among the masses.

An increasing number of individuals are now opting for personal loans. Such loans, also known as unsecured loans, are obtained without the need for collateral. You are required to repay the principal amount along with the specified interest over a period of time, known as the tenure. The installments paid over the loan tenure are known as Equated Monthly Installments (EMIs).

Following are some basic features and benefits of an unsecured loan.

  • High borrowing amount
  • Flexible repayment options
  • Competitive interest rates
  • Minimal paperwork
  • Quick loan disbursal
  • Online approval

Uses of an unsecured loan

Banks and NBFCs do not question the purpose of borrowing such a loan and hence you may use a personal loan for any purpose you seem fit. You may use the amount received to cover emergency medical expenses or may use it to cover your wedding expenses. You may also use such a loan to pursue your further education, to cover expenses related to a domestic or international holiday, to consolidate debt, or to renovate your home, among others. Such a loan is also useful for repairing your vehicle, making down payment for a new home, or for starting a new business venture.

Eligibility criteria

The eligibility criteria for applying for such a loan vary from lender to lender. However, the basic criteria remain the same. Applicants need to be Indian residents and in the age group of 21 to 58 years. Applicants may be employed at public companies, Multi-National Companies (MNCs), or private companies. It is also mandatory to have a basic educational qualification, that of a graduate. Financial institutions also require applicants to have a minimum net monthly salary, say around INR 20,000, with a minimum work experience of one year.

Documentation required

Upon fulfilling the eligibility criteria, you may submit your application at the bank of your choice. Along with the application form, it is necessary to provide supporting documents such as identity proof, residence proof, age proof, signature proof, photograph, and ownership proof. Banks also mandate the submission of income details and bank account statements. You may display the originals for verification and may submit self-attested copies.

A personal loan offers relief from your cash crunch. Instead of tapping into your life savings, you may borrow such a loan to cover contingencies or any other financial obligation. By doing so, you may meet your expenses without any financial strain. You may systematically repay your EMIs and budget your finances accordingly.

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