What is a Personal Loan and how to apply for a personal loan
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What is a Personal Loan and how to apply for a personal loan online and offline

    What is a Personal Loan?

    Personal loans come to your rescue when you’re short of money. Nowadays, they are so easily available and disbursed so fast that many people take personal loans often to meet expenses.

    Usually applying for a personal loan online is easier, but there are pros and cons to all methods – online application and applying at the bank or through an agent.

    Let’s see the differences between the two when choosing which method would be best for you.

     

    How a Personal Loan Works

    A personal loan is a versatile financial tool that allows individuals to borrow a lump sum amount from a bank or financial institution, which they can then use for a wide range of purposes, such as medical emergencies, education expenses, debt consolidation, or even home renovations. These loans typically come with fixed or variable interest rates and specific repayment terms, often ranging from 12 to 60 months. To apply for a personal loan, individuals must meet certain eligibility criteria, including a stable income and a good credit score. Once approved, the borrowed amount is disbursed, and borrowers are required to make regular monthly repayments until the loan is fully paid off.

     

    Types of Personal Loans

    In the dynamic financial landscape of India, there are various types of personal loans designed to cater to the diverse needs of individuals.

    • One of the most common types is the 'Unsecured Personal Loan,' which doesn't require collateral and can be used for purposes like wedding expenses, travel, or medical bills.
    • For those looking to consolidate existing debts, 'Debt Consolidation Loans' are available, offering lower interest rates and simplified repayments.
    • 'Salary Advance Loans' are another option, primarily aimed at salaried individuals to address short-term financial gaps.
    • If you're in need of funds specifically for educational pursuits, 'Education Loans' offer flexible terms and lower interest rates to pursue higher studies in India or abroad.
    • Additionally, 'Medical Loans' are tailored to cover medical emergencies and treatments, providing quick access to necessary funds.
    • To address housing needs, 'Home Renovation Loans' can be sought to spruce up your living space.
    • Exploring these different types of personal loans in India can help you choose the one that aligns best with your financial goals and requirements.
     

    How to apply for a personal loan online

    When you apply for a personal loan online, you are directly purchasing it from the bank. There are no middlemen involved, and therefore, there are no added costs for the bank, such as agent commission. For this reason, your personal loan is usually given at a slightly lower rate of interest. So, the total cost of your loan is lesser.

    With the online method, you can calculate different loan amounts and tenures using an EMI calculator. By doing this, you can see how much you will pay the bank if you take a loan for 1 year or for 5 years. If you choose a short tenure, then you will pay a very high EMI, but the interest you have to pay the bank is very less. But if you make your tenure long, then the EMI is lesser, but you’ll end up paying the bank a lot of money in interest.

    Online applications are usually very fast and if you are eligible, it is disbursed immediately by way of credit to your bank account. Also, another advantage is nowadays, some banks accept scanned documents online, or they will send someone to your address to collect it.

    Many banks offer this option where customers can select if they want a personal loan at the ATM. If you are already pre-approved, you can get the loan disbursed. If not, a bank representative will call you.

    These methods ensure that you can get a loan without ever setting foot into a bank. The disadvantage is you have to do everything yourself. So, if you are not very knowledgeable on loans, then it may not be a good idea to apply for it by yourself. Another con is that you need a reliable internet connection, which many people in India still don’t have. It is not safe to carry out bank transactions from public computers like in an Internet café.

     

    Benefits of Personal Loan

    A personal loan can be a financial lifeline when you need it most. Whether you're facing unexpected medical expenses, planning a dream vacation, or consolidating high-interest debts, personal loans offer several benefits. They provide quick access to funds with flexible repayment terms, allowing you to manage your finances effectively. With fixed interest rates, you can budget confidently, knowing your monthly payments won't fluctuate. Moreover, personal loans don't require collateral, reducing the risk to your assets. By responsibly managing your personal loan, you can improve your credit score over time, opening doors to better financial opportunities. So, if you're seeking financial stability and peace of mind, consider the many advantages of a personal loan to achieve your goals and overcome financial challenges.

     

    How to apply for a personal loan offline

    There are three ways you can apply offline:

    • At the bank branch

    - You can visit a branch of the bank from which you want to take a personal loan. You’ll need to fill out an application form and submit it along with all the documents required.

     
    • Through an agent

    – Banks have agents who sell personal loans. These agents are especially helpful If you need guidance. However, they are paid a commission, and this might have a small impact on your interest rate.

     

    What is the maximum amount you can borrow in personal loan?

    You can apply for Personal Loans up to INR 10,00,000 without the need for collateral or security. Our application process is hassle-free and requires minimal documentation, ensuring quick and instant approval when you meet the eligibility criteria.

     

    What are the documents required for Personal Loan application?

    We prioritize simplicity and have minimized the necessary documentation. For expedited loan disbursement, make sure your Aadhaar card is linked to your mobile number.

     

    Are there any foreclosure charges on Personal Loan?

    • Prepayment/foreclosure charges: o If paid before 12 months of the last disbursement date, then 5% of the balance amount at the time of closure. o If paid after 12 months from the last disbursement date, then 3% of the balance amount at the time of closure.
     

    Personal Loan FAQs –

    1. What Is the Difference Between a Cash Advance Loan and a Personal Loan?

    • A cash advance typically involves borrowing a small amount of money from your credit card, with high fees and immediate interest charges. It's a convenient but costly way to access cash quickly. On the other hand, a personal loan is a longer-term borrowing option with a fixed interest rate and a structured repayment plan.

    2. How Can I Get Approved for a Personal Loan?

    • The personal loan approval process is quick and hassle-free. Your personal loan is approved once your documentation has been completed. Some of our customers may be eligible for pre-approved personal loan offers with preferential interest rate.

    3. Do Personal Loans Have Fees?

    • Personal Loans do have certain fees and charges as a part of the process. Click here to know more about the fees and charges associated with personal loans.

    4. Is personal loan the best way to borrow money?

    • Personal loans offer a range of benefits that can provide financial flexibility and stability. They provide quick access to funds, allowing you to cover unexpected expenses or make important purchases without delay. Moreover, they typically have lower interest rates compared to credit cards, saving you money on interest charges. Personal loans can also help you consolidate high-interest debts into a single, manageable monthly payment, simplifying your financial life.
    5. Can anyone get personal loan?
    • To be eligible for a personal loan, you need to be an Indian resident, and should be of minimum 23 years of age at the time of loan application and a maximum of 60 years at the time of loan maturity.

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