28 April 2020
>What are Personal Loans?
Personal loans are a category of loans that one can borrow from financial instruments available. These loans can be used for a variety of purposes such as renovation of home, repayment of debts, unexpected expenditure etc. However we must note that personal loans are not easy to obtain, and there are certain qualifications that one needs to have to get approved for a personal loan.
Below are certain points that you can pay heed to if you are considering to go for a personal loan.
Personal loans are unsecured.
This essentially means that in this case no asset or collateral is required as opposed to secured loans. Hence defaulting on personal loans means that the lender cannot set aside any property or mortgage against the loan. This is one of the major reasons for the difficulty in accessing personal loans. However the lender does have other actions to take. This includes reporting to the credit bureaus, having a collection agency or filing legal procedures for the same.
Personal loans have a fixed amount.
The amount that you can take as a loan is fixed in case of a personal loan. The amount fixed depends upon various factors such as the borrower’s income, credit rating etc. The borrower with a better credit score and a higher income can borrow a higher sum of money.
Interest rates for personal loans are calculated according to the customer’s salary
The interest rate is allocated according to the customer’s salary, the amount being borrowed, loan tenure and other criteria that differ from one lender to another.
Personal loans a fixed repayment period.
The repayment time period is fixed and ranges from 1 to 5 years.
Types of Personal loans offered by financial instruments
Personal loans affect your credit score.
There is no collateral for personal loans; however defaulting on a personal loan can affect your CIBIL score. However, everything from applying for a loan (which means a new inquiry on your credit report) to how timely you make payments will affect your credit. The key to maintaining a good credit score is making your loan payments on time each month.
EarlySalary here is a great option for individuals to get quick access to instant cash without any hassles involved. The personal loans are approved in a matter of just 10 minutes.