Features of a Loan & Characteristics of a Personal Loan
Personal loans are a great option if you need money to pay for specific purposes. This includes buying a car, home repairs, and an education program. These loans come with unique features. It makes them easier to avail in no time.
Personal loans are one of the most common forms of loans in India. This loan is given on a short-term basis with a fixed repayment period. You can check out such loan options at Piramal Finance. We offer loans with low interest rates.
Here’s What You Need to Know About Personal Loans
What is a personal loan?
A personal loan is a term used to describe a loan given to an individual for any purpose. It’s a short-term loan, typically issued by a bank or other financial institution. The borrower’s property secures these loans (such as an automobile). Also, it is repayable over a fixed period and has a variable interest rate. You can use these to pay off credit card debts, consolidate existing debts, start a small business venture, or buy a home. Since the government does not guarantee personal loans, borrowers must be careful to ensure they qualify for the loan before taking out the money.
Taking out a personal loan is important only if you can repay it in full and on time each month. A personal loan should also not be used to pay for emergencies. Usually, these situations are covered by other forms of credit, such as credit cards and utility bills.
Features of a Personal Loan
- A personal loan can help meet a variety of financial needs. It can cover short-term expenses, such as paying for school fees and replacing lost or stolen equipment, or emergency expenses, such as medical costs, car repairs, and home repairs. Personal loans can also be used to pay off high-interest debt, such as credit card balances or mortgages.
- There are two main types of personal loans: unsecured and secured. Unsecured loans do not need collateral to obtain the money. To obtain a secured loan, some form of collateral (such as a car) is required. Secured personal loans are more likely to be approved than unsecured ones because of their higher risk. But your chances of getting a secured personal loan depend on things like your credit score and how much money you make overall.
- Personal loans can come in different forms and have different interest rates and repayment terms. The most common personal loans include short-term time-based loans and long-term installment-type loans.
- Personal loan interest rates vary quite a bit depending on your loan type. Generally speaking, high-risk borrowers will see higher interest rates than low-risk borrowers. One way to lower your risk is by choosing.
What is the eligibility to get a personal loan?
One of the most important factors to consider when deciding whether to take out a personal loan is your ability to repay it. While loans are not generally considered an investment, some types of personal loans may offer better returns than other types of investments. If you have poor credit or low income, you may find it more difficult to get approved for a personal loan than for other types (such as credit cards). If this is the case, you may consider another loan with lower interest rates and fees.
To apply for a personal loan, you must qualify for some factors, which are
- To get a loan, you must be a salaried person. Entrepreneurs and self-employed people are not eligible for this loan. Your place of work can be a government office, a private or public company, a multinational corporation (MNC) or a company that works with MNCs, a partnership, or a sole proprietorship.
- Your minimum age at the time of application must be 21, and your maximum age must be below 60 at the time of the loan’s maturity.
- You must be earning at least Rs. 25000 per month.
- You must have worked in your current organization for at least six months.
What are the pre-payment and foreclosure charges?
These charges are usually added to the principal amount of your loan, and they are meant to cover costs associated with your loan. For example, pre-payment fees are used to pay the principal balance before it’s due. They can also cover costs related to loan modifications or short sales.
The type of fee you will most likely have is either a pre-payment charge or a foreclosure fee. These fees are both charged when you refinance or pay off your loan early.
Pre-payment fees are typically higher than foreclosure fees because they require more work from the lender. While you may be able to avoid them by refinancing or paying off your loan early, it’s always best to know exactly what you’re signing up for.
At Piramal Finance, you can get a personal loan with zero prepayment and foreclosure charges.
Minimum and maximum loan amount
The minimum personal loan amount is the smallest amount that you can borrow. The minimum personal loan amount sets a baseline for what a lender will consider when assessing your ability to repay a loan. This is typically the amount needed to obtain a copy of your credit report and pay the application fee. Yet, you can get a personal loan of at least Rs 1 lakh at Piramal Finance.
The maximum personal loan amount is the largest amount you can borrow under a single loan. You can get a personal loan for a maximum of Rs. 10 lakh. As long as you’ve got a good enough credit score, the maximum personal loan amount is usually pretty easy to hit.
- A PAN Card
- An identity proof, i.e., a passport, a driving license, an Aadhar Card, or the voter’s identity card.
- Any address proof like a registered leave or lease agreement, passport, driving license, Aadhar card, voter’s identity card, and utility bills like Telephone Bill /Electricity Bill, etc. (not more than three months old)
- An income proof that should either include your latest month’s salary slips or your bank statements from the previous three months
- A Co-applicant, If clubbing of income you need for higher loan eligibility, then a co-applicant is mandatory. You can only make your spouse a co-applicant. Also, the co-applicant will ask for all the above documents at the time of the loan application.
On the surface, personal loans may appear to be a good option for those who need money quickly. However, several factors must be considered before applying for a personal loan, including how long you plan to repay the loan, the amount you can borrow, and whether you can do this successfully with another type of loan. Piramal Finance provides a limited number of personal loans to qualified applicants. Apply Now!
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