Personal Loan – What you should know?

Start­ing from med­ical expenses, wed­ding expenses or any other finan­cial need, per­sonal loan seems to be the 1st option avail­able and also the most pre­ferred option to all of us. With the ease of apply­ing a per­sonal loan, it has become one of the eas­i­est forms of read­ily avail­able money.

What is a per­sonal loan?
A per­sonal loan is an unse­cured loan given to the bor­rower to meet finan­cial expenses with­out keep­ing any col­lat­eral. It means the bor­rower of a per­sonal loan does not have to sub­mit any guar­an­tee to the lender. All banks and finan­cial insti­tu­tions pro­vide per­sonal loans. Nor­mally the rate of inter­est rate ranges from 14 – 30% and dif­fers from bank to bank. In addi­tions, the rate of inter­est also changes from cus­tomer to cus­tomers within the same bank based on the customer’s credit his­tory, trans­ac­tions sum­mary and deposits with the bank.

Ben­e­fits of a per­sonal loan

No secu­rity
This is the rea­son why per­sonal loan out­weighs other forms of loans. Per­sonal loans are given based on the credit wor­thi­ness of the bor­rower. Based on the borrower’s income, past pay­ment his­tory banks grant per­sonal loan with the belief that the bor­rower will pay back the loan. From a bor­rower per­spec­tive, it is the most con­ve­nient loan avail­able with­out collaterals.

Repay­ment options are easy
A bank loan tenure is from 12 – 60 months. Every month, the bor­rower has to pay an EMI (Equated Monthly Install­ment) to the lender. EMI con­sists of inter­est and prin­ci­pal. All of the banks pro­vide pre-payment facil­ity where a bor­rower has the option of pre-closing the loan with a cer­tain loan pre-closure percentage.

Easy doc­u­men­ta­tion
Per­sonal loan require min­i­mum doc­u­men­ta­tion. Usu­ally banks require a proof of iden­tity, income proof and res­i­dence proof of the borrower.

Low – High amount loans
Nor­mally bank grants home loan in the range of 20,000 to 20 Lakhs based on the income level of the bor­rower. In case of urgent fund require­ment, per­sonal loan is an ideal option.

Draw­backs of a per­sonal loan

High inter­est rate
As per­sonal loans are unse­cured, banks charges extremely higher rate of inter­est to the bor­row­ers. Rate of inter­est varies from banks to banks and from indi­vid­u­als to indi­vid­u­als. Lack of trans­parency on arriv­ing at the rate of inter­est makes it unat­trac­tive to indi­vid­u­als. The rate of inter­est varies from 14 – 30 %.

Par­tial payments
Except few banks, a major­ity of the banks does not pro­vide the option of par­tial pay­ments. Even if the bor­rower is in a posi­tion to pay the out­stand­ing loan amount, he/ she are not allowed to pay . Pre-payment of the loans are avail­able with a penalty of 2–6% of the out­stand­ing loan amount.

Summary
Article Name
Personal Loan – What you should know?
Description
Start­ing from med­ical expenses, wed­ding expenses or any other finan­cial need, per­sonal loan seems to be the 1st option avail­able and also the most pre­ferred option to all of us. With the ease of apply­ing a per­sonal loan, it has become one of the eas­i­est forms of read­ily avail­able money.
Author
Personal Loan Bangalore

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3 Responses

  1. alex smith says:

    Thank you for sharing such great information. It is informative, can you help me in finding out more details property nri home loans. 

  2. sumit rajput says:

    Thanks for this wonderful article; I’m recently entered into this blogging. Your article really motivates me. Once Again Thank Very much. Good Job.

  3. GREAT!!!! THANK YOU for providing the clear information of both merit and demerits