Personal loan is an unsecured loan you can take from a bank or a financial institution for your personal needs. This type of loan usually requires a customer to fill out an application form, submit required documents and go through a credit check before the loan is approved, post approval loan amount is disbursed. Personal Loan can be obtained for a variety of purposes like medical emergencies, wedding or other family functions, home renovation, business expansion, purchase of furniture or home appliances or a sudden need of cash. Personal loan is a great help when you need money without too much hassle or borrowing from your friends & family members.
To be able to obtain a personal loan, you must meet certain eligibility criteria like age, nationality, a regular source of income, Identification and residential address proof etc.
Before you decide to apply for a personal loan, you should know some common terms used by banks and other financial institutions.
Some of the commonly used terms are:
Principal – This is the amount you borrow. For e.g., if you apply a personal loan of Rs 100,000, that amount is the Principal amount. As you continue to repay, the principal amount decreases.
Interest Rate– When you take a Personal loan, you agree to repay your loan with interest which is lender’s charge for allowing you to use the money and repay it over a period.
Loan Term or Tenure – The number of months you have repay the loan
Monthly Payment (EMI) – This is a monthly payment that you will pay every month during the loan term.
This is very convenient as you get an option of repaying it over a period in easy instalments & you get quick loan amount disbursal with minimum documentation.
Some of the advantages of Personal Loan you should know:
- No Collateral required
- Hassle Free Loan Processing
- Quick loan approval
- Instant Money Disbursal
- Easy Documentation
- Fixed repayment schedule
Obtaining a personal loan can also help you build your credit score as long as you make timely payments and repay your entire loan. However, missing or making delayed payments can negatively affect your credit score. This can result in limiting your ability to get loans in future.
Personal loans can certainly help you with your financial situation only if you take a loan for a good reason. You shouldn’t borrow unless your loan will help in improving your finances. Always make smart choices and avoid borrowing too much money. Using loan instruments can you can free up your savings for other important life goals.
Home Credit offers quick personal loans starting from INR 10,000 up to INR 2,40,000, for your immediate and long-term needs. You can apply online anytime, anywhere, with minimal documentation and get instant approval.
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