Are you in need of immediate finances to meet sudden expenses? Help is at hand, in the form of a personal loan.
What is a Personal Loan?
This is a short term loan that can be used to finance travel expenses, medical expenses, marriage expenses, and almost any activity that you need money for. The best part is that you get the money comparatively quicker when you apply for a personal loan. You can source personal loans from banks and various other financial institutions.
Types of Personal Loans
Basically, there are two types of personal loans, secured and unsecured.
There is a collateral security against secured loan whereas there is no such security while obtaining an unsecured loan. Hence, the interest rate of personal loan is higher on unsecured loans due to the risk involved.
Benefits of Personal Loans
- Best for short term financing
- Can be used for a variety of purposes depending on the need of each borrower
- Minimal documentation
- Quick disbursal
- No need for collateral or security (in case of unsecured loans)
With these benefits, it’s clear why a personal loan should be the obvious choice to tide over any cash crunch. In fact, it’s a lot less expensive than making payments with your credit card.
Remember, most personal loans have a short repayment tenure, while carrying a relatively high interest rate. So make sure that you evaluate your financial situation before deciding on a particular loan.
Documentation
Salaried employees, self-employed professionals, business owners, and entrepreneurs aged between 25 years and 65 years are eligible to avail personal loans from banks and finance companies. If you want to find the best deal for you, compare the various institutions to find out the best personal loan interest rates.
In most cases, personal loans are instantly approved once the eligibility criteria are met and the necessary documentation is provided.
You’ll also need to show these documents while requesting a personal loan:
Identity proof: This could be your passport, PAN card, Driving licence, or voter ID. The documents you need to provide as proof of age are the same ones as ID proof.
Address proof: To verify your address, along with your passport you’ll have to provide documents like your telephone and electricity bill, rental agreement, and title deed of your property (if applicable).
Apart from these documents, you also have to submit proof of your income and your bank statements for the past 3 months.
Once your lender has assessed this information, they will decide whether or not to sanction the loan.
While obtaining a personal loan is an easy task, it’s vital that you first assess your needs. Figure out if you really need the loan and if you’ll be able to repay it in future.
Author Bio:- Arwind Sharma is a financial advisor with an experience of more than 7 years. He has worked for topmost financial firms in India and has been a visiting faculty at many reputed institutes in India. Currently based in Pune, Arwind Sharma is a name to reckon with when it comes to financial management for big brands. A post-graduate in business economics, he is an alumni of Princeton University, USA. During his free time, Arwind teaches children from marginalised sections of society and also work on his blog on photography.