An unsecured personal loan is a loan that you can get from a bank, a non-bank financial institution or another financial institution to fund any of your personal needs. Personal loans have been available in India for several decades, but they have only recently grown increasingly popular. Several studies have found that the number of personal loan applications has increased over the last decade, and there are several explanations for this. After all, a personal loan requires no collateral, is available immediately and has low-interest rates. Furthermore, they are quick and simple to obtain, and you are free to use the funds in any way you see fit.
Let’s take a look at the top ten reasons why they’re becoming increasingly popular.
Quick loan application and approval
Traditional banks were renowned for taking a long time to approve loans. You had to wait several days for the final word on whether your loan was approved or denied. Online loan applications, on the other hand, take no more than 2-3 minutes. If all goes well, you might obtain your approval in as little as 30 minutes.
The entire process takes only minutes to complete, from application to disbursement. You will be able to obtain the cash you desire without ever having to visit the lender. Furthermore, the speedy loan approval and disbursement allow you to meet your emergency needs quickly and easily.
Easy availability Online
Several NBFCs provide websites or applications that allow you to apply for a loan online. You can also have your documents verified online without having to upload or submit them. The loan amount is directly paid into your bank account once you have received approval.
No collateral required
One of the key reasons why more people in India choose personal loans is because they do not require collateral. You don’t need to put up any security, collateral, or guarantor when applying for an unsecured personal loan. That isn’t the case with large-ticket loans, such as mortgages. One of the most crucial elements that banks check is our credit score.
Many options are available
Because there are so many personal loan lenders in India, you have a good variety of options to choose from. You can shop around for lenders online and pick the one that best fits your needs and budget. Compare lenders by loan amount, interest rate, repayment periods, eligibility criteria, documentation requirements, customer support, and other factors. Apply to one lender where you have the best chance of getting approved.
Minimal documentation
You do not need to submit a large number of documents when applying for an unsecured personal loan. Personal loans have far fewer documentation requirements than company and house loans. As a result, people are drawn to their low paperwork needs. To apply for a personal loan, you only need to provide proof of your name, address, and income.
Boost credit score
A personal loan is an excellent strategy to diversify your credit profile. If you take out a personal loan and pay off the EMIs on time, it can help you enhance your credit score. Because your credit score is an important factor that lenders consider when determining your creditworthiness, you can use a personal loan to enhance your credit score and gain access to more loans in the future.
Eligibility criteria
Personal loan eligibility requirements are simple and basic.
- You must be between 21 and 60 to qualify.
- The applicant must be an Indian citizen.
- You must be a salaried employee with a monthly salary of at least 25,000 dollars.
- You must have worked for your present job for at least 6 months and have a total of at least 12 months of work experience.
Flexible repayment tenure
Personal loans include repayment terms ranging from 12 to 60 months. You can select the repayment period that is most convenient for you. However, keep in mind that the interest expense for a longer loan term is much more than for a shorter one. As a result, personal loan repayment is made much easier with flexible repayment alternatives. You can use a personal loan EMI calculator to calculate your payments and choose the loan term that best suits your needs.
No end-use restrictions
One of the most significant benefits of taking out a personal loan is that the borrowers are free to use the money any way they want. While other loans, such as mortgage loans, must be used for a certain purpose, a personal loan can be used for any reason.
A personal loan, unlike other loan kinds, can be used to fund home renovations, travel expenses, study abroad, wedding planning, medical emergencies, debt reduction, and more. As a result, you have complete freedom to use your loan to fund any planned or unanticipated project.