Personal Loan

A personal loan is one of the best ways to obtain funds when you need them urgently.

It is an unsecured loan that is borrowed from the bank without any collateral. When you have significant expenses to take care of, a personal loan comes to the rescue.

It is hassle-free as it involves minimal documentation and can be done quickly.

You can repay this borrowed money over either months or years in installments as decided. If you are thinking of opting for this financial tool, but don't have a clear understanding of how to choose the best one for yourself, this guide is for you.

By the time you reach the end of this blog, we assure you that choosing the best personal loan for your needs will seem more effortless than ever.

Factors to Consider when Choosing a Personal Loan

Here are some of the key factors to keep in mind when availing a personal loan

Interest Rate: When choosing a loan, one essential component to look at is the interest rate. Remember, the definition of best loans here will be the ones with low interest rates.

Now, how do you identify this? Just go around comparing different banks and their interest rates.

This can quickly be done online. It is recommended not to go to your neighbourhood moneylender as they might take advantage of your situation.

Loan Amount: Determine the amount that you need to borrow. Keep your needs in mind and prepare a checklist. This will help you identify how much each of your needs is going to cost.

Knowing the exact amount you will need will help you compare different quotes from different banks.

Evaluate the Repayment Period: Another essential part of availing a personal loan is evaluating the repayment tenure from different banks.

Some banks may offer longer tenures, which allow you to pay a lower EMI amount but with an overall increased interest.

At the same time, others may offer a shorter repayment period with a more considerable EMI amount to pay, but will make you debt-free quicker.

Types of Personal Loans

This unsecured collateral-free loan can be used for various purposes. Below are the types of personal loans listed, according to the different financial needs of people:

Instant Approval Loans

If you are in urgent need of funds, then an instant approval loan is the right pick for you. These are short-term personal loans with a shorter tenure and quick disbursement.

If you are a salaried employee, you can get such loans based on proof of your income. On the other hand, if you are a self-employed individual, you will need business documents too.

However, one thing to keep in mind for such types of loans is that interest rates are always higher.

Home Renovation Loan

Looking for financial help because of home renovations or construction? Then this particular loan type is right for you.

Instant approval loans are primarily for financing such renovation works. These loans are flexible, with minimal documentation and quicker processing than home loans.

Wedding Loan

These types of loans are specially tailored for people who want big, fat Indian weddings. It covers the cost of catering, decor, gifts, venue, jewellery, attire, etc.

The process of availing such a type of personal loan is easy with simple eligibility, customised loan amount, and minimal paperwork.

Medical Loan

Medical loans are a great financial tool for individuals planning to undergo expensive medical procedures or surgeries. It is also of great significance in times of emergency.

The loan amount and repayment period vary depending on the hospital cost.

The only documents needed are the basic ones, and the loan is then processed quickly. Although the interest rate options are not that flexible since healthcare is a necessity, repayment options are.

Loan for Students

Students can take personal loans in order to fund their higher education. The loan amount then covers the student's expenses related to fees, hostel, books, electronic requirements, etc.

If you are a student planning to study abroad, this type of loan is right for you.

Student loans typically come with a longer repayment tenure of at least 10 years, so that the student can start paying after their education is over and they start earning.

Travel Loan

If you are someone who plans to take an international or domestic trip in the near future, this type of loan is for you. With the help of travel loans, you can fund your vacations.

The tenure loan amount and repayment period are customisable according to the individual's travel plans and needs. The eligibility criteria and paperwork for this type of loan are pretty simple.

Not just this, but some financial institutions also provide individuals with travel insurance.

Debt Consolidation Loans

This type of loan is for individuals who have to repay multiple ongoing loans, such as credit cards, loans, car loans, or any other personal loans.

With the help of this type of loan, you can consolidate all your ongoing debts into one lower-interest-rate loan. This simplifies debt repayment.

Conclusion

A personal loan is a simple, easily accessible, and quick loan type and is gaining popularity due to these specific reasons. Many financial institutions like ICICI, HDFC, Kotak, etc., offer particular types of personal loans. All you need to do is look around and check different interest rates of various financial institutions and choose the one that suits your needs.