What is a personal loan?
- A personal loan is an unsecured consumer loan that can be used for any purpose such as a holiday trip, buying furniture, renovating the house, and Personal loan for a medical emergency by any individual.
- Unlike many other kinds of loan, in personal loans there is no restriction on how the borrowed amount is finally used by the borrower has full freedom to use the money for any purpose they want.
- The lender offers a loan based on credit and other qualifiers of an individual.
- You can go to any financial institution and ask for personal loans, or you can apply online for personal loans.
Features of personal loan
There are two features of personal loans
- There are no restrictions on spending the amount of personal loan sanctioned by any individual.
- This is a difference between a home loan or auto loan where the loan amount sanctioned to be used to buy a property or a vehicle while a personal loan amount can be used in any way there is no restriction by the financial institution who grants a loan to you.
This feature of personal loans makes the personal loans more attractive to those customers who are not on the condition to generate loan earlier due to collateral can raise personal loans easily without any security.
Benefits of Personal Loans
Fixed interest rate
- Personal loans are easily available loans at a fixed rate of interest.
- Personal loans come with a lower interest rate than the credit card, especially if there is a good credit score.
- As the personal loans are available at a fixed interest rate, you can use the personal loans to pay the debt of that loan which is having a higher interest rate than student loans.
- Debt consolidation is one of the benefits of personal loans as anyone can save money paying higher interest rate loans amount from personal loans.
No Limitation on end-use
- The first and the most attractive benefit of personal loans is that unlike any other loan you can use the amount in any way you want, unlike home loans or car loans where you can spend your loan amount only for buying either a house or a car.
- The financial institution can not raise the limitation while granting personal loans.
No collateral required
- Financial institutions while granting personal loans can not ask for any collateral or security from any person. It is basically an unsecured loan so anyone can easily get it.
- Therefore, any person who is not having any security can easily take personal loans.
- A person who fulfills the eligibility criteria of personal loans can generate personal loans within a short time period.
- Some financial institution provides easy availability of personal loans online for prestigious customers.
Flexibility to choose the tenure
- The tenure period for personal loans goes up to 7 years.
- Hence, the customers may choose the tenure period according to their suitability. The longer the tenure period, the lower the EMI and vice versa.
- The customers can decide the tenure period after calculating the EMI options.
- Personal loans provide hassle-free paper.
- While granting personal loans financial institution does not require so much paperwork.
- You just need to submit your personal information, employment information moreover income information.
There are various impacts of personal loan