A personal loan is a loan that does not need any of collateral or security and it can be availed by individuals/members at a minimal documentation.
One can make use of these funds from personal loan for any legitimate financial need. Customers can repay it as per the agreed terms and conditions with the financial institution. Generally, personal loans may vary from a few months to a few years in easy equated monthly instalments.
One can use this personal loan amount in any way he/she wants to fund a holiday, buy a gadget, for medical treatment, home renovation, spend on a wedding, invest on your children’s education, etc.
A personal loan works in the same way as other loans.
- Customer can apply for a personal loan and submit the documents,
- Bank or financial institutions checks his/her credit worthiness and makes a loan offer.
- If he/she accept it, the funds will be transferred to his/her account, and they can use them any way they like.
- Customers can repay the loan amount in equated monthly instalments (EMI), which will depend on factors such as loan amount, tenure, and interest rate.
Advantages of Personal Loan:
- Low Interest Rates: Interest rates on personal loan, will be low when compared to repayment of Credit Card or Credit Card Loan. This holds good for huge amounts.
- Variety of usage: The amount received through this personal loan can be utilized in variety of ways like going for an international trip, funding for House renovation etc.
- Consolidated Debt: The best way to make use of this personal loan is to consolidate all the existing high interest debts with one single personal loan with low interests.
- Improve Credit Score: If customers keep on paying the loan amount till the agreed tenure without any cheque bounces, late payments, the credit score will be increased steeply so that it would be useful for further loans.
- Create an Emergency fund: one can find himself living pay-cheque to pay-cheque, without any funds to save. In that situation, instead of waiting for an emergency to happen, it is good to get a personal loan to create an emergency fund.
*Terms & Conditions