A personal loan is a type of unsecured loan that is usually availed by people in case of financial emergencies. As a matter of fact, you can avail personal loans online based on your credit score and the ability to repay the loan amount.
The repayment for a personal loan is done in the form of EMIs over a specified tenure. The tenure period is based on specific terms of your personal loan. It is, however, noteworthy that the interest rate on personal loans is relatively higher than education loan and secured loans.
Despite the high-interest rates, we still believe that taking a personal loan is always better than utilizing your credit cards. In this article, we have tried to explain everything we know about instant personal loans.
So, what is a personal loan and what can it be used for?
Like we mentioned earlier, a personal loan is a type of unsecured loan – wherein you don’t have to provide any collaterals. In fact, when availing a personal loan, you do not have to mention the purpose of its use. You can utilize the funds for almost anything – from funding your dream wedding to a trip abroad.
Here’s a list of things for which you can avail a personal loan:
Repay your credit card balances
Finance a medical emergency
Fund your dream wedding
Fund your higher education or a professional course
Start a small business venture
Renovating your home
How Do Personal Loans Work?
Since personal loans do not require any collaterals, the interest rates charged on availing a personal loan are higher than other secured loan. When you apply for a personal loan, you and your lender will make an agreement – wherein you can borrow a fixed amount and can repay the money with interest in the form of monthly installments known as EMIs over the specified tenure. Once you repay the loan amount, the loan account is shut down.
Personal Loan Eligibility Criteria
The eligibility criteria for availing a personal loan are as follows:
Income – you should have a stable monthly income that assures your repayment ability.
Age – you should fall in the age bracket specified by your lender.
Repayment Capacity – you should be professionally stable and must have worked in the company for a good number of years. In the case of self-employment, you should have some steady profits.
Credit Score – you should have a good credit score when availing a personal loan.
Existing Loans – you should not have any pending loan liabilities or at least should have the ability to manage additional debts.
Interest on a Personal Loan
When calculating the interest on your personal loan, consider facts such as credit score, monthly income, the loan amount and more. Lenders usually approve the loan application of people with low credit risk and those with a good repayment history.
The interest rates on any unsecured loan range between 8% and 24%. Your monthly installments are calculated as –
EMI = [Principal Amount x Interest Rate x (1+Interest Rate) ^ Number of Monthly Installments] / [(1+ Interest Rate) ^ Number of Monthly Installments – 1]
Foreclosure and Pre-payment Charges
If you plan to repay the loan amount before the tenure, some financial institutes charge an additional fee known as pre-payment charges. This fee ranges from 1-2% of your principal amount. Some lenders allow you to make partial payments. With part payments, you can bring down the principal amount to be paid, which further reduces the interest amount. Visit us to know Bajaj Finance Personal Loan Interest Rate.
Where Can You Get a Personal Loan?
Personal loans are available in all the banking institutes and can be availed by any individual. Moreover, you can avail personal loans from other sources like NBFCs and private lending institutes. Today, many lenders offer personal loans online which disburse the loan amount quickly. These online personal loan details and processing information can be obtained through the lenders’ websites.
If you are looking for a lender that offers personal loan benefits like quick disbursement, low EMI and minimal documentation – get in touch with us at Finserv MARKETS. Here, the loan application is approved almost instantly and the loan amount is credited into your bank account within 24 hours.
Apply for Bajaj Finserv Personal Loan with us, today!
“Finserv MARKETS, from the house of Bajaj Finserv is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment and exclusive EMI store, all under one roof- anytime, anywhere!”