What is Personal Loan? And It’s Benefits [2022]

Personal Loan is also a type of loan. Which is provided by almost all the banks nowadays. It is often seen that people feel a lot of shyness in talking about and seeking information about the loan. Due to which they are not able to get the correct information about getting the loan. And for this reason they are not able to get the loan on time. There is no compulsion in personal loan. By taking this type of loan, you can fulfill any of your needs.

Today, a large number of people are applying for a personal loan to meet their huge expenses. One of the reasons for the rise in popularity of personal loans is an unsecured loan. It does not require any guarantee and is available within a short period of time.

You can easily get a personal loan from any bank or non-banking financial company of your choice. With online services offered by financial institutions, you can get the loan amount in your account within 48 hours.

What is Personal Loan?

Personal loan is an unsecured credit, which is provided by financial institutions on the basis of criteria like employment, repayment capacity, income level, profession and credit history of the borrower. Personal loan, also known as customer loan, is a multi purpose loan. Which you can use to fulfill any of your urgent needs.

Like I said earlier, people feel shy to talk about loans. Why all of you here know this. There is nothing wrong with taking a loan. You can take loan to grow your business etc. But taking a loan unnecessarily and beyond your capacity can create a lot of trouble for you.

What are the benefits of taking a Personal Loan?

In other types of loans like home loan or gold loan, you have to provide many documents. But minimum documents are required for personal loan and loan approval is also quick.

With various financial institutions offering personal loan online services, the loan amount is disbursed within a few hours, provided the lender gives your loan repayment date.

Another important feature of a personal loan is that the lenders give you the flexibility to choose your loan tenure. Usually the tenure of personal loan ranges from one to five years. So, you can choose the loan tenure based on your repayment capacity.

How much can I get a personal loan?

How much loan the bank will give depends on your income level and profession. Generally, lenders sanction the loan based on their calculations, so that the EMI does not exceed 40% – 50% of your monthly income.

If you are a business owner or self-employed, the lender will determine the loan amount based on the profits earned and recorded in the profit and loss statement. If you are employed, the lender will determine the amount based on your salary and other liabilities.

What are the Types of Personal Loan

People take personal loans for different purposes, accordingly personal loans are also divided into:

  • A personal loan is also taken for the reconstruction of the house, it is called Home Renovation Loan.
  • The loan taken for marriage is called Wedding Loan.
  • The personal loan taken for higher education is called Higher Education Loan.
  • Loan taken for any small work is called Small Personal Loan.
  • he loan taken to pay off your old outstanding loans is called Debt Consolidation loan.

Documents required to get Personal Loan

You may need the following essential documents to get a personal loan.

  • Credit card score report
  • KYC Form
  • Last bank statement
  • Income statement
  • Identity Proof like – Aadhar Card, Driving License, Voter ID Card, Passport etc.
  • Address proof like phone, electricity, water bill, rent agreement etc.
  • PAN card
  • Photo

Why Choose Personal Loan Option

Various types of loans are provided by banks and financial institutions, but personal loan is more beneficial than all other types of loans. The most important thing is that the approval for personal loan is available in 2 to 3 days, along with this you can make the smallest installment as per your convenience.

Benefits of Taking Personal Loan

  • No security is required for personal loan.
  • Banks give these loans by looking at the applicant’s income, cash-flow, credit score and re-payment capacity.
  • With good repayment capacity, good credit score and income, the applicant gets the
  • loan at low interest.
  • Loan availability of large amount
  • Flexible Duration
  • There is no restriction on the use of loan
  • Interest competitors
  • No colletal is needed

Interest Rate on Personal Loans

There is an apprehension in the mind of many people that what is the interest rate on personal loan, so I would like to tell you that the interest rate on personal loan depends on the lending institutions, it has no fixed interest!

But generally its interest is payable from 12% p.a. to 20% p.a.

The main reason for charging higher interest on it is because it is an unsecured loan hence it carries more risk!

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