How often have you found yourself in need of extra money for personal reasons and thought of taking a loan? A Personal Loan is one way of tackling your financial needs and emergencies. It’s an unsecured loan, which means it does not require any collateral.
So, what is a personal loan? A personal loan can be used to pay for anything from college tuition to medical expenses or even home repairs. Knowing the ins and outs of personal loans will help you decide if this type of loan is right for your financial situation.
What is a Personal Loan?
A Personal Loan is a type of loan that is typically taken out to cover unexpected costs or address pressing financial needs. Unlike other types of loans that are backed by collateral, such as your home or car, there is no physical asset tied to a personal loan. Personal loans are usually unsecured and can typically be obtained from a variety of lenders, such as banks, credit unions, online lenders, and even private investors.
How Do Personal Loans Work?
The process of getting a personal loan can be quite simple. You start by filling out an application and submitting it to the lender. The lender will then evaluate your creditworthiness, including factors like your income, employment history, and credit score. Once you are approved for the loan, you will receive a lump sum that you can use for whatever purpose you need. Most lenders require you to pay back your loan with interest over a period of time specified in the contract; typically 12 – 60 months.
Some Benefits Of Getting Personal Loans
Fixed interest rates
A personal loan comes with a fixed interest rate that means, over the period of loan, the individual has to pay the same amount of EMI.
Easy to obtain with minimal papers
A major benefit of these loans is that there is a minimum amount of paperwork.
Disbursement within a short timeframe
Your loan application can be approved within 72 hours if you meet the eligibility criteria. Several banks offer their existing clients the option of getting personal loans approved online.
Are personal loans available in joint applications?
If you are married or have other family fellows like siblings or parents, you are eligible to have a combined loan. While determining the loan amount, the lender will take into account both applicants’ income when considering their application. Therefore, you will have no problem applying for a larger loan amount without any issues. But keep in mind, the bad credit score of your partner will push you in a bad state as there may be more chances of loan rejections.
What Documents Are Required?
Documentation needs may vary depending on the creditor. However, the following are some vital documents you must submit with your application:
- A copy of the proof of salary (salary slips, bank account statements, ITR forms)
- Documentation of house and character
- Applicants who are self-employed must provide a certified copy of their degrees and licenses.
This blog gives an overview of what is a personal loan and its working benefits. These loans will help you buy important stuff, but you must return it to the bank at a fixed rate. You must read all the details before having a private loan. Aditya Birla Capital can help you get the best loans you will not find anywhere.
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