Last year’s economic downturn compelled many Indians to opt for short-term financial credits like a personal loan. As a result, the volume of personal loan disbursal grew by 3.8% from FY17 to FY21. Depending on the requirements, individuals can seek various types of personal loans. Read below to know more.
Types of personal loans
Based on the usage, personal loans can be of various types. To meet financial emergencies, one can use personal loans for varied reasons. Following are the types of personal loans one can opt for as per requirement.
- Medical loan
If one has to raise emergency funds for a medical reason, he/she can apply for a personal loan. Medical treatment often involves sudden and colossal expenditure. To meet these expenditures, individuals have to pay from their savings. Personal medical loans come in handy in such situations. With easy-to meet eligibility criteria, customers can meet their immediate medical expenditures by opting for personal loans.
- Personal loan for business
Though many lenders provide business loans to individuals to meet urgent fundraising, small and start-up entrepreneurs face issues while availing a high amount through business loans. In such a case, individuals can opt for a personal loan. Usually, lenders approve the loan amount within a day.
- Education loan
Individuals can finance education and admission fees using personal loans. Since personal loans are unsecured, it comes with no end-use restriction. So, with personal loans, one can meet various financial requirements.
- Personal loan for wedding
A loan taken for a wedding is one of the most common financing options individuals resort to. Since weddings often involve massive expenditure, arranging funds can be challenging. In such cases, opting for a personal loan is a wiser option than depending on savings. This way, individuals can plan a wedding in which personal loans can help.
- Travel loan
Planning a luxurious trip requires a lump sum. In such cases, a personal loan is an ideal tool to manage your travel expenses. With travel loans, one can opt for a flexible tenor, which may extend up to 60 months, making repayment more manageable.
Six features of a personal loan
Due to its unsecured nature, one does not have to pledge collateral while availing of a personal loan. Individuals can get a high amount without mortgaging any of their expensive belongings.
- Quick disbursal
Generally, after checking the relevant documents and other factors like income, credit history, etc., financers disburse the amount within a day. A small personal loan can be beneficial to meet emergencies like medical expenditure, business funds, etc.
- Easy to meet eligibility criteria
Intending borrowers must meet the eligibility criteria set by a financial institution to obtain a personal loan successfully. The eligibility criteria may differ from lender to lender. But some standard parameters include,
- Applicants must be a resident of India
- He/she should be between 20-60 years of age
- Applicants must be working at an MNC or a reputed private or public company
- Minimal documentation
Unlike other consumer financing options, personal loans require minimal documentation. Lenders usually check documents like KYC, employee ID, salary slip of last two months, bank statement of last three months, etc., before sanctioning a loan. Individuals need to keep these documents handy before applying for a personal loan.
Also, they can learn how to get a personal loan by visiting the lender’s website.
- No restriction on the end-use
Apart from knowing the different types of personal loans, one must learn that personal loans come with no restriction on the end-use. This enables an individual to use the loan amount to meet any financial emergency without any limitation.
- Competitive rate of interest
Lenders offer an affordable personal loan interest rate, which is comparatively lower than other financing options. Individuals can therefore make considerable savings.
Leading financiers also extend pre-approved offers to eligible borrowers. These offers are available on several products, such as business loans, personal loans, etc. This facility further streamlines the loan application process. Individuals can check their pre-approved offers online by providing their name and contact details.
Overall, one can raise funds quickly with the help of different types of personal loans. However, individuals need to compare various lenders to avail a competitive interest rate.