There are numerous loan products available in the market. However, it is important to choose the type of loan which suits your needs and fits your ability of repayment. A personal loan is a loan that is taken by an individual from lenders, banks, or credit unions. The amount borrowed may be used for any purpose. It is paid in a lump sum and is supposed to be repaid over a period of time.
The loan may be secured by an asset or it could be unsecured. Your credit score will have an impact on the way the loan is processed. There are multiple repayment options for you to choose from. The loan may also be customized based on your requirements. The most important feature of the loan is that the amount may be used for whatever purpose you feel like such as paying your home rentals, paying the school fees, clearing any outstanding debts, and so on. The interest rate, as well as tenure, will depend on your creditworthiness.
Process to apply for personal loans
After you have made a decision to apply for a personal loan, you need to understand the procedure for the same. The entire process of application is simple and straightforward. You may apply for a small personal loan online where you will need to compare the interest rates offered by different lenders and choose the one with the lowest interest rate. Based on your credit score, the interest rate will vary.
Alternatively, you may approach the chosen lender for further information about the loan products available with them. You need to choose a loan that is perfect for your requirements in terms of interest payable and the tenure. Once you decide on the type of personal loan you need, you may go ahead with the application procedure.
In order to apply for a personal loan, you will be required to submit your identity proof and fill up the application form. You might also be asked to submit details about your previous loan repayment history if any, so as to determine your ability and your willingness to repay the loan. At this stage, it is important to discuss the equated monthly installment (EMI) you will be required to pay once the loan is approved. Consider it as a monthly outflow and if you default in the payment of the same, your credit score will have a negative impact. In addition, you may also be required to pay a penalty in case you default on paying the monthly EMIs.
Although personal loans are easy to get, maintaining financial discipline while paying back the loan amount is extremely important.