Understand Personal Loans in 4 Minutes!

Updated on: 14 Dec 2021 // 19 min read // Personal Loans
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Many of us aren’t as financially literate as we would like to be, which is why we often end up dreading terms like loans, credit history, and the likes. Not anymore. Today, we will take a quick look at one of the most sought after quick credits – Personal Loans, and decode them in as little as 4 minutes! So, are you ready for this enthralling ride?

What is a Personal Loan?

A Personal Loan is essentially an unsecured loan that can be obtained to meet an array of financial needs. It is an all-purpose loan, and there is no overriding obligation to define the purpose of the loan while you Apply for a Personal Loan.

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Why Personal Loans?

In many situations, one might need some cash on an urgent basis. A Personal Loan solves this issue, thanks to its quick approval and disbursal time. In most cases, the borrower receives the amount in as little as 24 hours, which makes this loan truly efficient for meeting the expenses of medical emergencies and the likes.

Besides, a Personal Loan can be obtained without stating the purpose for which one intends to use the amount. Such flexibility is not allowed with other credit products such as Home Loans or Car Loans. This proves to be an added advantage for many borrowers who are seeking the loan in a bid to meet the financial needs of a wedding, a child’s higher education, vacations, or home renovations amongst others.

Who Is Eligible for a Personal Loan?

Any Indian Citizen with government-issued identity proof and a residence proof who enjoys a steady stream of income and has a Good Credit Score is eligible to apply for a Personal Loan.

What Else to Know About Personal Loans?

Well, there is plenty that one must know about Personal Loans before going ahead and applying for them. Here are some of the most important aspects of this credit alternative.

  • Loan Amount

The loan amount offered for Personal Loans usually varies from Rs. 50,000 to Rs. 25 Lakhs, depending on the borrower’s income, the debt to income ratio and the ability to repay.

  • Interest Rate

Personal Loans can be procured quickly, and they are often more flexible than their more traditional counterparts, which is why they are also more expensive. Depending upon the bank or the lender one approaches, and the credit history of the borrower, a Personal Loan may attract an interest rate of anywhere between 11% to 22%, and in some cases even as high as 25%.

  • Processing Fee

This is one of the least known aspects of Personal Loans. While the processing fee for SBI Personal Loans is 1% of the loan amount (in addition to the applicable taxes), other banks charge it in the range of 0.5 to 2.5% of the loan amount. Hence, if one is looking forward to borrowing an amount of Rs. 5 Lakh they can expect to shell out a processing fee ranging somewhere between Rs. 2,500 and Rs. 12,500 for the same. 

  • Tenure

A Personal Loan is usually offered for a period ranging from 12 to 60 months. However, some lenders offer the same for extended loan tenure of 84 months, depending on the repayment ability of the borrower.

Have some extra seconds on your hand?

We hope that you know now just enough about Personal Loans to apply for the same, and get quick approval on your loan application. However, before you do so, make sure you absolutely need the loan amount, as, after all, it is a debt which attracts interest, and that too at a higher rate than you would like.

A Quick Checklist to Answer before Applying for a Personal Loan:

  • How much I absolutely need to borrow?
  • Do I have a repayment plan?
  • Am I opting for the best interest rate offer?
  • Are there any additional charges involved?
  • Can I prepay?
  • Have I incurred the market research?

As you answer all these questions, you will certainly be better equipped to make an informed decision on Personal Loan.

Also Read: How to Apply Online for an Instant Personal Loan?

To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 70+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.

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