Things to Know About Personal Loans
by John Judge WriterNot having enough money to spend is a
problem. Most of us are familiar with it, and many are probably quite used to
this reality.
But what happens when emergencies
arise suddenly, and you need money? Personal loans provide fast cash solutions
to help you with your financial requirements. Thus, here is an introduction
that can help you know more about personal loans.
WHAT IS A PERSONAL LOAN?
You can think of a personal loan as a
method of finance which has the following features:
- Shorter Repayment
Tenure compared to other loans, typically for 1-10 years
- Personal loans are a
form of instalment credit
- Borrowers get a
one-time payment of cash with the help of a personal loan
- Borrowers pay back
the principal amount and interest in monthly instalments over the tenure
of the loan.
TYPES OF PERSONAL LOANS
1. Secured Personal Loans
Secured personal loans are provided
with collateral support, like a unit trust account in the same bank or a fixed
deposit. It may also require proper documents.
Secured personal loans aren’t risky, and if you qualify, the personal loan interest rate will be lower than that of unsecured loans. You should note that with the secured loans, you might lose the asset you have kept as collateral if you’re unable to make repayments due to death or disability.
2. Quick Unsecured Personal Loans
Loans that don’t need any collateral are termed quick personal loans. Instead of depending on the borrower’s assets as collateral, lenders provide unsecured loans based on the borrower’s income. Student loans and credit cards are some examples of unsecured personal loans.
3. Consolidation Loans
Debt consolidation loans refer to
borrowing a new loan to repay consumer debts and other liabilities. Multiple
debts are combined into a single debt, such as a loan that has more favorable
payment terms – a lower interest rate, lower monthly payment or both.
HOW TO APPLY FOR PERSONAL LOAN
- Run the numbers
- Check your credit
score
- Choose your loan type
- Consider your options
- Check personal
loan interest rates in banks
- Pick a lender and
apply
- Provide necessary
documents
- Accept the loan
- Start making payments
PERSONAL LOAN ELIGIBILITY
People aged between 21 and 67 years
are eligible to take a personal loan. You need to be a resident of India. You
should be working in an MNC, private or a public company.
Taking a personal loan is a wise
decision to meet the extra funding requirements. But, before making any
decision on borrowing a personal loan, it's wise to check service charges and
hidden fees associated with it.
Sponsor Ads
Created on May 9th 2022 06:05. Viewed 191 times.