A personal loan is one of the most flexible loans available to a borrower. It is especially useful in case funds have to be raised in an emergency because of the speedy approvals and disbursements of this loan. A personal loan is unsecured which means a borrower does not need to put up any collateral to avail funds under a personal loan. This loan is also unconditional which means the lender does not put any conditions on the end use of funds except for a few end uses such as gambling or for any illegal activities.
Features of a personal loan:
1. Multipurpose loan:
A personal loan is a multipurpose loan. The lender does not put any conditions on the end use of funds. It can be used for a range of different purposes such as:
• Wedding expenses
• Medical emergency
• Home improvement and repairs
• Business expansion
• Paying off expensive or costlier debt
• Purchase of consumer durables
• Travel expenses
It is also possible to combine any of these purposes and split the usage of funds. Since the lender does not put any conditions, it is up to the borrower to use the loan funds.
2. Instant approvals and disbursement:
With online applications, approval and disbursements have become instant. Some lenders approve loan applications in a couple of days and fund disbursement happens in a couple of hours to a few days. Such speedy disbursement and approval makes it an excellent option during emergencies.
3. Minimum documentation:
Applying for a personal loan does not require many documents. Standard KYC documents and income proof is all that is required to apply for a personal loan.
4. Negotiable rate of interest and tenure:
Depending on the income and credit score, a borrower can negotiate with the lender for a lower interest rate and loan tenure.
It is extremely easy to apply for a personal loan. This can be done either online or offline. With online loan applications, approvals and disbursals are faster, especially if the borrower has some prior relationship with the lender.
How to apply for a personal loan online:
Most lenders have an online loan application procedure. To apply for a loan online, you need to visit the lender’s website and fill up a personal loan application form. For some lenders, you need to create an account on their website to apply personal loan online.
After you fill up a form, a customer care executive from the company will approach you for your documents. If you have created an account on the company’s website, you may have an option to upload these documents on the website itself and these will be submitted to the lender. In case you have been pre-approved for a personal loan from your lender, these documents may not be required.
Once your documents are submitted, the lender will assess your loan application. Most likely, the lender will submit a request with a credit bureau to receive your detailed credit report. The lender may request additional information to help them assess your loan application. Based on this, it will either accept the loan application or reject it. In case of acceptance, the funds are disbursed based on company policy.
Neha Sharma is a finance student who loves to write in her free time. She has spent considerable time researching about personal loan. Through her work, she has explained how to apply for one