Personal loan are a boon for those who are unable to get money from other sources, in case of emergencies. And this is the reason that in recent years, these loans have gained immense popularity. People are now not only taking personal loans for emergencies, but also for needs which are related more to improvement of life quality, like for travel, vacation, purchase of gadgets, etc.
But do you know all the important features of a personal loan? If not, don’t worry. This article tries to provide all the basic details of these loans.
These are unsecured loans that do not have any collateral requirements. This is also the reason that interest rates charged on these loans are more than those changed on other secured loans like home loans, auto loans, etc. These loans are given to successful applicants after assessing their credit history and loan repayment capacity.
One of the most popular features of these loans is the ease of getting it. Since there is no collateral, lenders don’t do much documentation or physical verification. All that is required is applicant’s ID proof, Income proof, Address proof and age proof. Now days, its even possible to get approval as well as disbursal of loans in less than 24 hours. So this is another step in making personal loans an ideal choice for emergency fund requirements.
Personal loans also don’t have any restrictions on the end use of money. So the borrower has full freedom to use the money for whatever purpose he/she deems fit.
Now since this is an unsecured form of loan, it is very important to have a good credit history to get thee loans. Lenders want to ensure that they are lending only to those who will be able to pay their EMIs on time and would not default. So if you have been irregular with your credit card payments or other EMIs, then chances are high that your personal loan application will be rejected.
Since there is no restriction on end use of money, personal loans are highly flexible forms of borrowing. But do not borrow more than what you can comfortably repay. Always assess your EMIs (you can use online emi calculator for personal loans) before signing on the dotted lines.