Loan! A middle class individual’s rescue to most financial problems. Even though it means paying a part of your income every month, people are increasing relying on loan for most expenses. Be it education, marriage, buying a home or even a high-end mobile phone, it is easier than ever to avail a loan. You can avail it against your home, shares or any other prized asset. And, if you do not own any of these assets, you can still avail a loan. How? Personal loan is a type of loan that gives you credit without any security against it.
Here are additional things you need to know more about this type of loan facility
Personal loan is the most flexible of all loan facilities available. This can be understood by the fact that, your lender need not ask you the purpose of the loan. You can avail it for anything that you want. However, it is advised to carefully analyse your needs and avail the loan only for emergency purposes and not to fulfil your luxury requirements.
Whenever you avail a loan, you are required to offer a security or a guarantor. However, this is not applicable in case of personal loan. Thus, it makes personal loan the most convenient option to cope with your emergency financial needs.
As you are not offering any security or a guarantor, lenders (banks or financial institutions) scrutinise your financial profile. Salary, credit score, past financial record are some of the factors considered by lenders before they grant you a loan.
Moreover, there are limits set by every financial institution on the minimum income you need to be able to avail a personal loan. Also, to be eligible, you need to be working for at least 5 years. Do not dream of buying a Royal Enfield through loan as you pass out from college. (Banks won’t grant you loan for the same). You can also use online Personal loan emi calculator to understand how much credit you need.
Since, there is no security pledged against this type of loan, personal loan interest rate remains high. It varies from 15 % to 25 %.