Personal loans have become a popular financial tool—a total game-changer—for anyone who needs quick access to funds without having to put up collateral. With the rise of online lending platforms in India, getting a personal loan has never been easier. You can easily sign up with a lending platform and apply for an instant loan online. But before you start filling out those applications, you need to know what you’re actually getting into. So, buckle up, and let’s get started on this explanatory guide to personal loans in India.
What are Personal Loans?
A personal loan is an unsecured loan that people can use for a variety of things, including debt consolidation, home renovations, paying for medical bills, vacations, and more. Personal loans don’t need collateral, such as a house or car, unlike secured loans. Instead, lenders decide the borrower’s eligibility and loan amount by looking at the borrower’s income, credit score, and other financial parameters.
Eligibility Criteria for Personal Loans
All that said, you must satisfy the lender’s requirements in order to be approved for a personal loan. Depending on the financial or lending institution, the eligibility requirements may change, however some common elements include:
Age: Most lenders stipulate that borrowers must be under 60 and at least 21 years old.
Income: Lenders prefer borrowers with a reliable source of income, and the majority set a minimum monthly income requirement of Rs. 25,000.
Credit score: When determining whether you qualify for a personal loan, lenders heavily weigh your credit score. Your chances of being granted a loan are increased if you have a high credit score.
Employment history: Lenders like applicants with a history of steady employment and who have been with their present employer for at least six to twelve months.
Factors to Consider Before Applying for a Personal Loan
Prior to submitting an application for a personal loan, it is crucial to take into account the following:
Interest rates: Depending on the lender & your credit score (or some other parameter), personal loan interest rates can change. To obtain the best rate that matches your budget, it is crucial to compare interest rates from various lenders.
Loan amount: You should think about how much cash you need & if the loan amount the lender is offering satisfies your needs.
Loan tenure: This term describes how long you have to repay the loan. Lower monthly payments may be the result of longer terms, but overall costs and interest rates will likely be greater.
Processing fees: If you apply for a personal loan, the majority of lenders impose a processing fee. This fee must be taken into account when figuring up the overall price of the loan.
Prepayment fees: If you choose to prepay your loan, some lenders may impose a fee. It is crucial to confirm whether the lender levies prepayment penalties and take this into account when making your choice.
Advantages of Personal Loans
Personal loans have a number of advantages, such as:
Instant loan online: Online loans enable quick processing; so online personal loans are approved swiftly, and the money is typically available within a few days, sometimes even in hours. This is partly thanks to modern digital lenders who have adopted the latest technological infrastructures. Personal loan apps have further improved the system, as they let you apply for loans instantly using your phone.
No collateral required: Personal loans are more readily available to people who lack assets to pledge because they do not require security, in contrast to secured loans.
Flexible application: The loan can be used for a variety of things, including home improvements, debt consolidation, medical costs, and more.
Fixed interest rates: Most personal loans have fixed interest rates, which implies your monthly payments will be the same for the duration of the loan.
Conclusion
People in India who require rapid access to finances for a variety of objectives may find personal loans to be a beneficial financial tool. Thanks to digital lenders and personal loan apps, today you can apply for loans with a few clicks on your phone. Moreover, digital lending platforms like Fibe have lowered the eligibility criteria bar, making personal loans within the reach of the regular Indian, especially first time borrowers—the lending platform provides personal loans based on income; it doesn’t demand for a solid credit score.
Understanding the requirements, things to think about, and advantages of personal loans is crucial before applying for one. You can locate a personal loan that suits your spending plan and takes care of your financial needs by doing your homework and comparing different lenders.
