Were You Aware of These Personal Loan Facts?

Posted by mymoneymantra on April 21st, 2018

There are times when there is an immediate need for money. At times like this, a Personal Loan can be a blessing as it is quick to obtain if you have an acceptable credit score. Most banks, as well as Non-Banking Financial Companies (NBFCs), offer a variety of Personal Loans.

Every person has their own reason for Applying For a Personal Loan, some use it for their business, some for unexpected medical expenses, and some people also use it to pay off other debts and hence have to only make a single payment every month. It is also better to use a Personal Loan to pay off any considerable Credit Card debts as the interest rates for Personal Loans are relatively lower than the interest rates for Credit Cards.

Whatever the reason for applying for a Personal Loan it is essential that you are aware of these few facts:

It is Unsecured

A Personal Loan is an unsecured loan as you do not need to provide any collateral. This means that you don’t have a lot to lose your valuables in case you are unable to pay off your loan. However, defaulting would reflect poorly on your credit score thus reducing your chance of getting another loan.

The online lending marketplaces like www.mymoneymantra.com, has made it very simple to Apply for a Personal Loan online. Online personal loans usually get approved within minutes, and you can receive the money in a matter of days.

It is Convenient and Easy

Getting a Personal Loan depends on three main factors including eligibility, income, and credit score. The higher your credit score and income the more money you will be able to borrow. Some institutes, however, have a set limit as to how much money can be borrowed with a Personal Financing. Although the amount is usually enough to cover any immediate expenses that you may have.

It Has a Fixed Interest Rate

Banks or NBFCs that provide Personal Loans usually have a fixed interest rate. This rate would stay the same for the entire loan period. Also, if you have a perfect credit score, you can also bargain with the lender for a lower interest rate. The rate that you fix with the bank at the start of the loan is what you would have to pay for the rest of the loan period.

However, there are also a few institutes that offer these loans with flexible rates that are usually lower than the fixed rates elsewhere. The risk here is that the interest rate could suddenly spike according to the condition of the market. 

It Has a Fixed Period of Repayment

The period in which you have to repay the loan is fixed before the loan can be sanctioned. Different lenders have different tenures within which you have to repay the loan (usually vary between 1-5 years). The length of this tenure usually dictates the interest rate that you would have to pay. At times if you can collect a bulk amount of money to pay back the loan before time, some lenders would allow you to prepay part of the loan and reduce the tenure along with the principal loan amount. But this could also result in a prepayment penalty.

Additional Charges

Although the interest rates on loan are the most crucial charge, there are also other charges that are associated with Personal Loans.

While some lenders may not charge any processing fees when you Apply For a Personal Loan other lenders could levy a processing fee after the procedure of the loan is over. This fee is usually a certain percentage of the loan amount. It can be around 1-2%.

There are a few institutes that also charge a fee for the documentation required for the loan, making copies of the statements, and they can also levy a late fee in case of not paying the EMI (Equated Monthly Instalment) on time.

Documents Required for a Personal Loan Application

If you have checked your Personal Loan Eligibility and you have been approved for the loan, the rest of the process is simple. All you have to do is provide required documents to the lender. Although each lender will have their own different requirements some of the standard documents that you would need to provide are:

• Identity proof: Voter's ID/drivers license/PAN card/Passport
• Residential proof: Passport/leave and license agreement/utility bills not more than three months.
• Past three months bank statement

• Recent three months salary slips

• Two passport sized photographs of the applicant

Knowing everything that you need to know about personal loans can make it easier for you to choose the kind of personal loan best suited to you. It also helps you remain calm as you know that you are not putting a lot at risk so you can have peace of mind.

To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 60+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.

Talk to our Loan Specialists toll-free at 1800 103 4004 to know more about our products and offers.