Posted On: 07-May-2021
An amount of money an individual can borrow through a bank for different purposes by having nothing in collateral or asset is termed as a Personal loan. For example, starting a small business, home improvement, car purchase etc. To manage these expenses over a period any individual can opt for a personal loan. It is the easiest and quickest way of getting a loan.
The personal loan incurs a range of interest over a period based upon the time-frequency an individual opted and this interest+principal amount is paid on EMI (equated monthly instalments) basis. The period usually ranges from 12-84 months. Once you have completed paying all the dues then you're free from loan.
Types of Personal Loans:
Two types of personal loans are available in the market they are as follows.
Secured Personal Loan and Unsecured personal loan. The first one itself is saying the banker provides secured personal loans it means by having a collateral in hand in this type of loans the collateral will be savings account of the holder, in case the customer didn't pay the loan amount then bank can take payments from his savings account.
Unsecured Personal loans these loans doesn't have any back up like collateral, this type of loans are available for individuals based on their financial history.
Benefits of Personal Loans:
The following are the important advantages coming along with personal loans. Let's discuss in detail about it.
No Need Of Collateral:
When an individual decides to get a loan he or she doesn't require any collateral to get a loan. Bank will provide finance based upon the individual financial history. Does he maintaining minimum balance in his account or does he has any dues to pay etc. Bank will verify based upon that and bank will sanction the personal loan to the individual.
Borrow Any Amount Which is Required:
As we have discussed in the above, if the financial history of an individual is fine with bank then bank can provide any amount of loan based on his requirement. This will be analysed by the bank based on the risk factor as per the individual statements such as financial as well as previously made loans and all.
Reasonable Interest Rates:
Based upon the risk factor on personal loan banks fluctuate interest rates between 12-24 percentage. It is completely reasonable the way they are incurring the risk based upon the finance they are providing. If they feel the individual can repay as early as possible based on his financial statements then bank can reduce the interest rates.
Enough Time To Repay:
If banks are providing the finance they give proper repayment track for the individual, based on that whether he can repay the loan amount on his own or not in within Like 12-84 months based on that repayment track a bank can provide to the customer.
As per the above article it's clear that personal loans connected with so many benefits in terms of financial needs, and you must and should and understand if you have the proper income and you have the will to make that repayment then only it is suggested for loans otherwise it's hard for people to pay.
As per a saying "Modern slaves are not in Chains, they are in Debt"
So please mind the fact and apply loan in a proper financial organization in terms of proper information and it shouldn't hide anything in terms of loan and it's interest rates and moreover many financial institutions try to hide charges like processing fee etc.