At the time of financial crisis, we tend to turn over loans. It may be from friends, family or by a professional lender or banks. Generally, this choice depends upon the amount of the loan and requirement. In case of high amount we look for the banks or professional lender for our help. But most of us are unaware about the norms and conditions of the bank and get confused between different types of loans. One such confusion occurs when we opt for personal loans. What is it? What requires? What are advantages? All these questions arose in the mind of borrower.
This article deals with all the information, one want to know about personal loans.
- What is personal loan
As the name suggests personal loans are those loans which are given to individuals for their personal use like health treatment, education etc. It is a form of unsecured loan in which borrower need not put any collateral as security. The person itself is security its monthly income works as a deciding factor.
- Flexibility in use– The biggest advantage of personal loan is that, it can be used for any purpose. Bank doesn’t ask for any specific reason for borrowing loans and hence one could use it whenever and wherever he/she wants. It is different from car loans or house loans where one has to use the amount specifically for buying a car maintaining house respectively.
- Quick Availability– This is another key feature of personal loan. Right From applying the loan to disbursement of the money, all is done without any hassle and quite quickly as compared to any other loan. At the time of urgency these loans are even processed faster and money is discharged within 24 hrs. It is available in different banks but the most ideal deal is offered by either SBI or HDFC Bank Personal loans.
- No collateral– In between all the advantages, I refer this is the biggest advantage of personal loan especially for those who don’t have any asset like car, home, share to put as collateral. There is absolutely no need of security howsoever, the only need is required is the ability of borrower to pay back.
- Interest rates- As these personal loans are unsecured in nature; they pose high risk to lender, so to cover it they charge high interest rates on the loan as compared to all those secured loans like car or house loans.
- Credit history– As it is said past sins can ruin the present, this completely makes sense when comes to personal loan. It is very necessary for the borrower to have a good credit history as no lender want to have debt for the amount he/she lends. So, if you have low Cibil score, due to failure to pay any loan, there is chance that your application could get rejected.
- No part payment– Lenders usually don’t allow any part payment on personal loans as not the case with secured loans. Hence, the borrower ends up paying more money to lender which could be very expensive.
As one can see from above that how and who can avail this type of loans. If you are person with good credit history, you would easily get the loan for any purpose. But if you are not, then it is suggested to first increase your cibil score and further try for this loan.