Understanding a Personal Loan
What Is a Personal Loan?
A personal loan is an amount of money you can borrow to use for a variety of purposes. For instance, you may use a personal loan to consolidate debt, pay for home renovations, or plan a dream wedding. Personal loans can be offered by banks, credit unions, or online lenders. The money you borrow must be repaid over time, typically with interest. Some lenders may also charge fees for personal loans.
CHOOSE A PERSONAL LOAN THAT SUITS YOUR NEEDS
A personal loan is the best option if you need funds for an urgent need or a short period. It can be availed for any purpose. Since it is an unsecured loan, the lender approves the loan basis the applicant’s details such as age, income, existing liabilities, and credit score, among others. No time is spent in the assessment of the collateral unlike in the case of a secured loan such as a gold loan or loan against securities or a loan against property. There could be different types or kinds of personal loans depending on the end-use. But usually, a personal loan is of only one type and it can be availed of for any kind of requirement.
What is a personal loan used for?
You are free to use the funds you get from a personal loan any way you wish – fund a holiday, buy a gadget, pay for medical treatment, use on home renovation, spend on a wedding, finance your children’s education, etc.
How do personal loans work?
A personal loan works pretty much the same way as most loans. You apply for a loan, submit the documents, the bank checks your creditworthiness, and makes a loan offer. If you accept it, the funds are transferred to your bank account, and you can use them any way you like.
You must repay the loan in equated monthly installments (EMI), which will depend on factors such as loan amount, tenure and interest rate.
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