What is a personal loan?
Personal loans are one of many types of loans you can borrow from a bank. These loans are typically general purpose loans that you can use at your discretion for things like consolidating debt, pay for an unexpected expense, or pay for a small home improvement project. Personal loans are often more difficult to get and have strict qualification requirements.
Personal Loan is an unsecured loan to meet your current financial needs. It is referred as an unsecured loan as there is no security against it. Personal loan has higher interest rates than secured loans like a home-equity loan, but you are not required to put up any collateral to ensure repayment.
The loan granted for consumer for the purpose of personal, medical emergencies, family support, child education, to enjoy vacations or the house hold expenses durables like(Extension, Repairs, purchase of air conditioner, computer, Refrigerator etc. Which appose to business or commercial use basically these loans are either unsecured or secured by the asset purchased or by a guranter.
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Benefits of Personal Loan
Personal loans do offer you many benefits. Here are some of the most important ones:
Flexibility of use: Personal loans are multipurpose. They can be used for various different types of purposes, ranging from travel expenses, medical expenses , purchasing the latest jewellery to electronic gizmos or even house/car improvements.
Quick availability: Getting the personal loans is very fast. In some cases, you can get the loan even within 24 hours. So if you are looking for emergency funds, personal loans are your best bet.
Minimal documentation required: Normally, personal loans don’t need much documentation, as compared to a home loan or car loan. Hence the processing time is quicker.
No collateral or security needed: No need for security is required to obtain this loan and the loan tenure is much shorter compared to home loan or car loan. This has less risk for the borrower comparatively, since if you are unable to repay the loan, your security is forfeited in case of other loans. As personal loans don’t need any security, your assets are safe. This makes this kind of loan attractive to those who don’t own any assets like car, home, shares etc.