All of us have had to face circumstances one time or another when we need cash instantly but are out of options. At this time, we try to borrow and arrange funds from friends, neutralize our savings, or, even worse, have to sell something. It is in these difficult times; an individual can approach financial institutions and avail of instant personal loan facilities.
What is meant by personal loan?
A personal loan means a loan provided by financial institutions like banks, NBFCs, or financial technology companies for a short period of time. These personal loans are offered on fixed interest rates to help them in cash crunch situations of life. The personal loans are granted for a variety of purposes such as:
- Marriage expenses
- Medical emergency
- House renovation
- Purchase of equipment
- Travel expenses
What are the different types of personal loans in India?
Personal loans in India are of two types, secured loans or unsecured loans.
Financial institutions offer secured loans- The secured loans after keeping collateral as security that includes jewelry, home, other assets, etc.
Unsecured loans – The financial institutions also offer unsecured loans that are without keeping any collateral as security. It is important to note that the interest rates charged on unsecured loans are high compared to secured loans.
Financial institutions offering personal loans
The financial institutions that offer personal loans are banks, NBFCs, and online financial companies. Today, online fintech is becoming increasingly popular with the present generation because of various factors such as quick disbursal, less paperwork, easy user interface, etc. These online platforms can be downloaded through the Google play store on mobile for free.
What are the benefits of online apps offering personal loans?
The instant personal loan apps are digital platforms where an applicant can apply for personal loans for the short term that are between Rs 5000 to Rs 5 lakh. These instant personal loan apps are now functional in almost all major cities of India. Some of the benefits of online apps are:
- Quick and smooth loan process from applying to disbursement of the loan amount
- Flexible loan repayment policy
- Competitive Interest rates on loans
Eligibility to get a personal loan in India
The eligibility criteria to get a personal loan are:
- Credit score – An individual with a high credit ranking is more preferred by lenders to grant loans. A credit score between 750-900 can get personal loans quickly.
- Age – The age of the borrower should be between 21 to 65 years
- Nationality – The applicant should be an Indian national.
- Employment – Both salaried and businessmen or self-employed are eligible.
- Income – Minimum Monthly income – For the salaried class – Rs 12000
Documents required to get a Personal loan
The documents required for the verification process includes:
Identity proof: Aadhar card, PAN card, Passport, Driving license.
Address proof: Ration card, utility bills (Electricity bill, telephone bill, water bill)
Income proof: Bank statements of 6 previous months
Photos: two passport size photos of the applicant
What are the benefits of taking personal loans from online platforms?
The instant personal loan apps are easy to load on mobiles and take less time to process loan applications than the banks and NBFCs. Some of the other benefits of availing personal loans from digital platforms are:
- Variable loan amount: An applicant can take a loan according to his/her requirement ranging from Rs 5000 to Rs 5 lakh.
- Quick approvals: The loan process takes less time as most of the process is done digitally, which takes less time. The loan amount is disbursed into the account as soon as the verification of documents is over. The best part of is an applicant can track the whole process and is routinely apprised.
- Easy documents collection: The documents can be uploaded either directly or the doorstep collection facility is also available for document collection for customers’ convenience.
- Affordable EMI: A borrower can decide the EMI and the tenure of repayment as per convenience. Moreover, the online apps send regular reminders so that the borrower doesn’t fail to pay on a timely payment schedule.
- Another loan approval: With digital platforms, it is possible to get another loan approved with the already sanctioned loan; moreover, the eligible borrower doesn’t have to submit documents again for getting the second loan.
- Zero credit history: The lenders usually offer loans to borrowers with good credit history, but the online apps sanction personal loans even to candidates who are first-time borrowers with no credit history.
What are the costs associated with personal loans?
A borrower must be aware of the costs incurred and must be repaid before taking the loan. Some of the cost factors are:
- Interest rates
The interest rates charged on the loan amount differs from one lender to another and is usually dependent on factors like loan amount, credit score, etc. It is generally in the range between 10% to 25%. It is, therefore, advisable to do thorough research before applying for a personal loan.
- Processing fees
All lenders charge a processing fee from the borrower. The processing fees are one time charges and is usually 1% to 3% (plus taxes) and depends upon the lender.
- Prepayment charges
If a borrower decides to prepay a loan, some lenders charge prepayment charges. It is a kind of penalty and cost 5% to 8% depending upon the lending entity.
- Loan cancellation penalty
If a borrower decides to cancel the loan, lenders penalize him, and the charge levied depends upon the lender.
A difficult phase in life becomes more challenging when an individual is short of funds. In times like these, an individual can apply for Personal loans from Instant personal loan apps to fulfil the need for money in real quick time. The digital companies are a saviour as they process your loan application quickly and disburse the loan amount in three or four working days. Thus with the instant personal loan apps, a person can lead a stress-free life.