Financial institutions provide an unsecured loan in the form of personal loans without insisting on collateral security. You can simplify the loan process with MyMoneyMantra. Read on to understand the features, types of unsecured loans and unsecured loan interest rate.
A loan that does not require security backup is an unsecured loan. An unsecured loan can be availed in the form of personal loans that can be used for various purposes and can be repaid in easy instalments. The eligibility criteria and documentation are not extensive for an unsecured personal loan. The loan can be availed by submitting an online application along with the required documents. With a quick turnaround time, an unsecured personal loan can be the best solution for instant funds requirements.
A loan offered without any security is an unsecured loan. These are loans with high risk as there will the lender will not have any recourse in case of default. That is the reason unsecured loans are provided only to individuals/professionals with a good credit rating that indicates their creditworthiness and responsibility towards paying up debts promptly.
A regular income is another criterion that is insisted on to ensure repayment capacity. The addition of a co-applicant will further enhance the chances of approval of the unsecured loan. However, the unsecured personal loan interest rate is much higher than the interest of secured loans
Unsecured loans are quick loans that can be availed without the hassle of providing collateral security.
There are various types of unsecured loans. Unsecured loans can either be revolving loans or term loans. Revolving loans are normally extended to run businesses. The different types of unsecured loans are as given below:
This loan can be used to meet urgent financial requirements. This loan is very convenient as it can be utilised for any purpose without providing proof of end-use. Approval of an unsecured loan is only on the basis of the creditworthiness of the applicant and their past loan repayment history.
A simple online application can fetch you funds ranging from Rs. 10000/- to Rs. 40.00 lakhs depending on the income level and credit score. Some of the lenders provide pre-approved personal loans to eligible customers that will be instantly credited to their account on placing a request. Flexible repayment terms make an unsecured personal loan the most sought after solution for instant funds requirements. The interest on unsecured loan will be greater than that of a secured loan owing to the risk involved
Banks provide unsecured education loan to students for higher studies. Education loans up to Rs. 7.50 lakhs will be provided without any collateral security. However, the inclusion of parents/guardians as co-borrowers will be mandatory.
The expenses covered under education loans are -
A maximum repayment period of 15 years, excluding the course term and moratorium period of 12 months, will be permitted. If the interest is serviced periodically, the repayment will be set for the principal amount.
Credit Card: The preset limit based on the income and credit score is an unsecured loan that can be either repaid in full or part up to the amount utilised. The interest will be charged only to the extent of utilisation.
For individuals who have opted for revolving payment, this unsecured loan can prove very expensive as the interest charged on the balance will be as high as 3.5% pm. A zero interest facility is provided for 45 to 50 days from the date of usage of the limit, which will be beneficial if you make the payment of the entire liability without carrying on any balance for the next billing cycle.
Revolving limit: This facility will be beneficial for businessmen to meet working capital requirements like procurement of raw materials, meet administrative expenses, and any other regular overheads that are business-related. This unsecured loan will be in the form of an overdraft with a preset limit considering the annual business income.
Sales proceeds credited to the account will bring down the liability. The limit will be restored to the extent of credit received and will be available for utilisation again. The advantage of paying the interest on the amount utilised and not on the limit sanctioned makes this facility a feasible option for businessmen.
Here are the key highlights of banks providing unsecured loans. You can avail of unsecured personal loans from any of the top banks listed below.
|Purpose||Multipurpose loan without any end-use restriction|
|Quantum||Option to choose the amount from Rs. 50000/- to Rs. 25.00 lakhs as per the requirement.|
|Rate of interest||Affordable interest rate starting from 10.90% p.a.|
|Repayment||The loan can be repaid within 1 year to 6 years|
|Application process||Both online as well as offline|
|Purpose||For planning a vacation, for wedding expenses, for medical emergencies, for education expenses, for purchase of home gadgets, for taking an existing business to the next level etc|
|Quantum||Ranging from Rs.50000 to Rs. 15.00 lakhs|
|Rate of interest||12% to 21% p.a.|
|Repayment||Can be repaid within a minimum of 12 months and a maximum of 60 months|
|Application process||It can be applied online or offline by visiting the nearest branch|
|Purpose||SBI permits utilization of the unsecured personal loan for plenty of purposes like meeting medical expenses, renovation of your existing house, education expenses of self or children, wedding expenses, planning a dream vacation, etc|
|Types of unsecured personal loans|
The different types of unsecured personal loans offered by SBI are
SBI Pension Loan for pensioners
SBI Xpress Credit for salaried individuals having salary account with SBI
Pre-approved Personal Loan for existing customers
SBI Quick Personal Loan for salaried individuals not having salary account with SBI
For SBI Pension Loan: Between Rs. 2.50 lakhs to 14 lakhs depending on the age and type of pension
For Xpress Credit: Up to Rs. 20.00 lakhs
For Pre-approved Personal Loan: As per the track record
For Quick Personal Loan: Up to Rs. 20.00 lakhs
|Rate of Interest||10% to 15.65% p.a.|
|Repayment||Ranging from 6 months to 72 months|
|Application process||Both online and offline applications are accepted|
|Purpose||The key feature of the unsecured personal loan is the unrestricted usage option. It can be availed and utilised as per individual requirement|
|Quantum||Up to Rs. 30.00 lakhs|
|Rate of Interest||10.50% to 18% p.a.|
|Repayment||Flexible repayment terms between 12 months and 60 months|
|Documentation||No elaborate documentation. Simple and hassle-free|
|Application process||The loan application can be submitted online or can be submitted offline by visiting the nearest branch.|
|Purpose||An unsecured personal loan is an ideal credit facility as it can facilitate any urgent financial requirement. The advantage of a personal loan is the multiple usage options.|
|Quantum||Up to Rs. 30.00 lakhs|
|Rate of interest||Starts at 10.75% and goes up to 20% p.a.|
|Repayment||The loan is to be repaid along with interest within 72 months|
|Application process||An easy application process that can be either online or offline|
You can get insight into secured vs unsecured loans with the points listed below.
|Secured Loan||Unsecured Loan|
|The loan amount will be higher and in tune with the value of the security offered.||A maximum of Rs.3 lakhs to Rs. 40.00 lakhs depending on the lender.|
|The Personal Loan Rate of Interest will be competitive and affordable.||The risk attached to unsecured debt is higher. So the interest on unsecured loan will be higher than the interest on secured loans|
|Longer repayment tenure up to 30 years||The maximum repayment period will be five years to 6 years depending on the lender.|
|Elaborate documentation||Simple documentation|
|Approval and disbursement will take a longer time.||A maximum of 48 hours and instant disbursal in the case of pre-approved loans.|
|Home loans, Gold loans, vehicle loans, loans against fixed deposits or LIC policies etc., are secured loans.||Personal loans, student loans, revolving loans and credit cards are unsecured loans.|
The eligibility criteria stipulated for unsecured loans are as given below:
The documents listed below should be submitted along with the application for unsecured loans.
Aadhar card, Voter’s ID Card, Passport, Driving Licence, Utility Bills
Photo ID Proof:
PAN Card, Passport, Driving Licence, Aadhar Card
Income Proof for Salaried Individuals:
Income Proof for the Self-employed:
Additional documents for Students Loan
Now get IDFC First Bank personal loan of Rs. 20000 to Rs. 1 Crore at lowest interest rate starting from just 10.49% per annum and the processing fee is 3.5% of the sanctioned limit + GST.
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An unsecured loan can be availed by salaried/self-employed individuals, self-employed/salaried professionals, businessmen and students.
Personal loans, Credit Cards, Student Loans, Revolving Loans(Overdraft facilities) are examples of unsecured loans.
The quantum of unsecured loans is need-based. You can borrow as low as Rs. 10000/- and up to a maximum of Rs. 40.00 lakhs depending on your requirement and income level.
The interest rate on an unsecured loan differs from lender to lender. It can be between 8.60% to 21% p.a.
Unsecured loans are loans without security backup, so a mortgage is not an unsecured loan.
Banks offer unsecured loans to facilitate hassle-free and quick solutions to the instant financial requirements of the applicants. Most applicants look for a loan that can be availed without putting their assets at risk and for a shorter tenure. To make this possible, banks provide unsecured personal loans to creditworthy applicants with a regular source of income and a good credit rating.
The maximum amount you can get in an unsecured loan can vary between rs. 3.00 lakhs to Rs. 40.00 lakhs depending on the lender.