Personal Loan

What is a personal loan?

A personal loan is an unsecured loan that a person borrows from banks or NBFCs (Non- banking financial companies)  to fulfill immediate and personal needs. An unsecured loan is such which do not need any collateral, it is also called as the signature loan and it can be applied by just using your financial and identification details. There are many banks that provide personal loans in the range starting from 50,000- 1 crore as per your need and eligibility. The eligibility of a person depends upon your monthly earning, CIBIL score, any previous loan details, age, EMI and tenure.  

My Mudra is an organization that helps you to get a personal loan in minimal time, reducing the path between you and your dreams.  We are assisting the needful in getting a personal loan with the lowest interest rate as per your requirement. Read the article to understand the essential details on personal loan. 

Key points of Personal loan

   · A personal loan is an amount of money borrowed from a financial institution that can be used for almost any purpose.

   · An unsecured personal loan is an option for borrowing money since it requires no collateral.

   · You can apply for a personal loan together with your spouse or other family members such as parents or siblings.

  · Personal loans can vary greatly in terms of interest rates, fees, amounts, and repayment terms. 

   · There are many ways to obtain a personal loan, including banks, credit unions, online lenders, and lenders with specialized programs.

Reasons to take a personal loan

The purpose of a personal loan is to allow you to borrow money and repay it over time to pay for your expenses.  You can finance a large purchase that you cannot afford upfront with a personal loan.  

Home renovation: - A personal loan is the most convenient way to upgrade your home or carry out necessary repairs, renovations, or structural changes to your home.

To buy a vehicle: - Vehicle loans are a type of secured personal loan that uses your car as collateral. This may be a better option if you are buying a car from a dealer. You could get a lower price.
Moving costs: A personal loan can help you cover the moving expenses if you don't have the cash for a local or long-distance move.
Vacation expenses: - Vacations may not require taking out a personal loan. If you want to go on a luxury cruise, a personal loan can help you fulfill your vacation dreams.

Wedding costs: - A personal loan can help a couple finance big-ticket wedding items, such as the coordinator, venue, dress for the bride and groom, etc.

Emergency expenses: - A personal loan is a low-cost option to meet an emergency, such as accidental hospitalization, medical expenses, or sudden medical bills.

The benefit of a personal loan

Hassle-free documentation
A significant benefit of personal loans is the minimal documentation required. Applicants can upload the necessary documents along with their application forms. It is a completely paperless process.
To apply, you will need to submit proof of age, address, bank account information, salary slips, tax returns, and credit history.
Quick disbursal
The process of getting a personal loan is quick. Hence, they are the ideal financial product to meet urgent cash needs or payment obligations. To get your loan disbursed quickly, you must meet eligibility criteria and have a good credit score.
No collateral required
A personal loan is an unsecured loan. This means that, in case of default or non-payment of dues, you don't need to provide collateral. Having a regular income and an excellent credit history is enough to qualify for personal loans.
Help with debt consolidation
The ability to clear debts is one of the benefits of personal loans. It is possible to eliminate liabilities from your portfolio with a personal loan if you have secured loans or high-interest credit cards. In comparison with credit cards, personal loans offer lower interest rates. As a result, you will be able to pay off high-interest debt with the low-interest financial product.
Versatility
Personal loans are the most suitable type of loan to use. There are no restrictions or limitations on the end-use of the loan by banks or lenders. It is one of the most beneficial aspects of personal loans. The borrowed money can be used for a variety of things, including planning your dream vacation, paying off other debts, purchasing luxury gadgets, or hosting a grand wedding. Emergency medical expenses can also be met with personal loans.
Build credit score
A personal loan can help you build your credit score, especially if you have a low credit score or are new to credit. The interest rates on these loans are attractive and the repayment terms are flexible. Keeping your EMIs and interest payments on time will improve your credit score.
You should, however, choose a loan you can afford to repay. It will negatively affect your credit score if you miss any EMI payments or if you are unable to pay the EMI.

Flexible tenors

A flexible repayment schedule is one of the benefits of personal loans that attract borrowers. Due to this, you can choose a tenure that meets your financial and personal needs. EMIs are lower when the tenure is longer. Therefore, select a tenure that allows you to optimize your monthly outgoings.
Attractive rates of interest
You can get a personal loan at a competitive interest rate. Therefore, you will be able to enjoy affordable EMIs. Interest rates are generally fixed. As a result, your EMIs are also fixed for the entire loan term, and you will not have to worry about interest rates rising and falling.
Tax benefits
The amount of tax-related exemptions you can claim depends on the use of the funds. Depending on what you use the loan for, you may be able to deduct up to Rs. 2 lakh in interest for a financial year if you use it for renovations, construction, or as a down payment for a house. Additional terms and conditions may apply to different use cases.

Eligibility of a personal loan

There are certain criteria that you need to consider before applying for the personal loan. Read the following points carefully if you are thinking of applying the personal loan. 

   · Check your CIBIL Score: Check the credit history of your finance, you must score more than 700 to qualify for personal loan at low interest rate. 

    · Age:  21 years - 68 years 

   · Status of your employment: You must be employed for atleast 2-5 years or you must have a running business for 2-5 years. 

    · Monthly Income: Rs.15,000

    · Tenure: The time period of the loan is between 5-7 years.

Top banks and NBFC to consider for personal loan in India?

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