A personal loan helps you avail of funds for a multitude of purposes. It is an unsecured loan given to individuals with clean financial and stable credit records. Though it is easy to apply for a personal loan these days, you must remember to perform due diligence to avoid any financial stress later.
While taking a personal loan, you must know your objective and how much you need. Once this is done, you need to know the tenure you want to repay that loan based on your income. The interest and amount of the loan will decide how long you will be repaying the debt.
You can make use of personal loans for multiple purposes. There are no restrictions as to how you can use the funds. You can use it for travel, renovation of your house, repaying your debts or any other personal need. Here are a few advantages of taking a personal loan.
No Collaterals Required
You don’t need to lock in your assets. Unlike secured loans like home or car loans, a personal loan does not require you to mortgage anything with the lender. You can continue to enjoy your assets without any restrictions.
Freedom To Use the Loan
A personal loan can be used for any financial need, such as paying your medical bills, your child’s college fee or travel. It gives you the freedom to make use of the funds as and when you need them. For eligible individuals, the funds are readily made available by lenders.
Unlike other types of loans, a personal loan takes a minimum of time to get approved. In a few hours to a few days, you can get a personal loan considering you meet the basic eligibility criteria of the bank. A personal loan can help you arrange funds without delay if you need funds to handle an emergency.
Good For Short Term
A personal loan can be borrowed for shorter periods. You can take it for a few months to a few years. You don’t need to service the loan for longer terms. It is, however, important to choose the loan tenure based on your repayment capacity so that it does not hamper your other expenses.
Take It for Business Requirements
A personal loan can come in handy if you are a businessman who often requires instant money to handle day-to-day expenses. You can make the down payment for a new office or expand your business with the help of a personal loan.
Pre-approved Personal Loan
Many lenders offer pre-approved personal loans to existing customers with a clean financial history and good credit scores. If your credit score is good (700 or above), it becomes effortless for you to become eligible for pre-approved loans.
A personal loan is the best option for both salaried and self-employed. It takes less time and requires a minimum documentation process. It is an unsecured loan, so the lender approves the loan basis your eligibility, such as age, income, existing liabilities, and credit score, among others.
It would be best to compare the interest rate against different tenures for the amount you need before signing the loan agreement. Also, if your credit score is good, don’t forget to negotiate for lower interest rates. Keep the tenure shorter for lesser interest liabilities. The table below compares more than 20 banks for personal loans of Rs 5 lakh for three years. You can compare the interest rates and EMIs for the loan. One can decide based on their requirements.
Interest Rates & EMI on Personal Loan
Compiled by BankBazaar.com
Note: Interest rate on Personal Loan for all listed (BSE) Public & Pvt Banks considered for data compilation; Banks for which data is not available on their website are not considered. Table consists of lowest interest on personal loan (irrespective of loan amount). Data collected from respective bank’s website as on 25 Oct 2022. Banks are listed in ascending order on the basis of interest rate, i.e. bank offering lowest interest rate on Personal Loan is placed at top and highest at the bottom. EMI is calculated on the basis of interest rate mentioned in the table for a Rs 5 Lakh Loan with a tenure of 3 years (processing and other charges are assumed to be zero for EMI calculation); Interest and charges mentioned in the table are indicative and may vary depending on the bank’s T&C.