As the name suggests, personal loans are loans taken for personal reasons and can be Loan against Property or unsecured loans. This can vary from person to person. These loans are of two types and are given to the customers for a period beginning from 12 months to 7 years. Owing to this, we must know about how these loans impact the finances and the kinds of loans available.
What is the fundamental functioning of a personal loan?
A personal loan is taken for various reasons such as education, wedding, business, home renovation, emergency medical aid and many more. This can be taken for a tenure ranging between 1 year to 7 years. Within this span, they must be returned through EMI’s. The monthly installment amount depends upon the tenure for which the loan is taken.
What are the types of Personal Loans?
These are unsecured and secured loans.
Secured Loans: Loan against property is the secured loan and is usually used as a return on investment as the property is at stake. So if you need Business Loan, then you must opt for this kind of loan.
Unsecured loans: These are loans that are given after checking the credit score of the customer along with other eligibility criteria.
Who lends Personal Loan?
Financial Institutions and banks lend this kind of loan. However, not just banks, other institutions such as consumer finance companies also provide this kind of loan. Peer to peer lenders also provide, but with a high rate of interest. It is always better to check the legitimacy of a lender before handing over any eligibility papers and taking the loan. Security is a must in dealing with any documents.
What else, other than Personal Loans?
It is not always possible to take a Loan Against Property or an unsecured one due to many reasons. In that case, one can always choose to take credit cards that also give you an ability to use overdraft. Through this, you can pay small debts that have incurred over some time. However, for this to your creditworthiness is scrutinized and post all the verification, a loan is sanctioned.
Financial issues are overwhelming and personal loans are a way you can get relieved and take it for various purposes, from being a Business Loan Into that for a wedding in the family.