There are numerous categories of loans available to help you come out of the financial quicksand. Whilst you can use most of them for some specific purposes only, for example, a home loan for buying a home, a bike loan for purchasing a two-wheeler, etc., when it comes to personal loans, there are no boundaries. You can install a personal loan app and avail a loan for your medical, educational, wedding, travel expenses, etc.
One can avail of personal loans through offline and online modes as well. Although the former is the most common method, people are gradually realizing the benefits of online loan apps over traditional ways, thereby making them more popular.
In this article, we shall discuss the concept of personal loans and how they work, followed by some of the best apps available to take such loans.
What are Personal Loans?
Personal loans are a type of financial funding taken from either financial institutions or other lenders for your expenses. The loan amount borrowed is fixed at a particular interest rate and has a definite repayment tenure.
Types of Personal Loans
Mainly, personal loans are of two types:
1. Unsecured Personal Loans
Personal loans are mostly unsecured. It means that no collateral is required to avail the loan and that’s why the lenders usually carry out robust verification before giving a loan. The entire procedure might take a lot of time for approval; hence, it is better to use a personal loan app like Bajaj Finserv for immediate funding.
2. Secured Personal Loans
It requires you to provide collateral to the lender. In case you fail to repay the loan, they will seize your collateral.
How Do Personal Loans Work?
The procedure of availing a personal is effortless to understand:
1. You check your eligibility for the loan.
2. You select the loan amount and apply for it.
3. Then, you have to submit the required documents and wait for the approval.
4. After proper verification, your loan will be approved and transferred to your account within 4 to 5 business days.
If applying on an instant loan app, you don’t have to wait for days to get approval or the amount disbursed. Within minutes of submitting your application, the loan amount gets transferred to your account for utilization.
Essential Things to Know Before Applying for a Personal Loan
Whether you apply offline or through the help of various loan apps in India, there are some specific things you must know before availing a personal loan. These are:
1. Interest Rates
Interest rates are the charges of borrowing money that you have to repay with the loan amount in the first place. For example, if you borrow INR 1,00,000 for 1 one year at an interest rate of 5%, then at the end of the year you will be repaying INR 1,00,000 plus INR 5000 (5% of your principal loan amount).
Compare the interest rates available on online loan apps before finalizing a deal.
2. Repayment Tenure
It refers to the period during which you will be repaying the entire sum of money you have borrowed from the lender. Usually, the tenure ranges from one to five years but for smaller instant loan amounts like INR 10,000 it might be reduced to six to eight months.
3. Penalties
Whether you borrow the money manually or through the loan apps in India, all execute penalties on customers who have been defaulting. Therefore, you must be aware of their guidelines or terms and conditions before applying.
Conclusion
Personal loans are an excellent way to cover your expenses like wedding, travel, furniture, etc. Availing them online through specific loan lending apps can land you in a paradise where you can get instantaneous funding to battle down any emergency you face.
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