Pointers on personal loans
Loans are generally classified into two types- secured and unsecured. Secured loans are loans that are provided taking into consideration a security like a home, property, gold etc. Unsecured loans are loans that wouldn’t need any such security and they are offered based on the income of the applicant.
Personal loans are
unsecured loans and as the term personal indicates it is used to meet
some immediate financial needs which cannot be met otherwise with the
pay check. Personal loans do not have a specific purpose they can be
used for anything like a medical emergency, buying a car, paying for
tuition, wedding etc.
As no security is
required for applying for a personal loan, the terms and conditions
for this type of loan is generally very stringent. The interest rate
at which these loans are offered is also higher. So experts often
state that personal loans should be kept as the last option.
Personal loans are
generally fixed. There is no chance of getting huge amounts like
home loans. They are purely provided on the income that is earned
each month and the repaying capability. If a person is earning Rs
30,000 a month and expects to get Rs 2, 00,000 as a loan amount, it
wouldn’t be possible. The other factor that would be considered is
the credit history of the loan applicant.
The interest rates are
always high on personal loans. It is always better to clear a
personal loan by taking a gold loan or borrowing cash from a friend
or relative as the interest keeps accumulating. It can be seen that
often people pay more money than the borrowed amount in case of a
personal loan.
The repayment period of a
person loan is often fixed. The term that is given to repay would
vary from one bank to the other. If a longer period is opted for
then the monthly repayment would reduce however the interest amount
would increase and market fluctuations should also be taken into
consideration. When a loan is taken the focus should be on repaying
it as soon as possible. Whenever there is a lump sum amount at
disposal it is better to repay the loan than invest it elsewhere.
HDFC Personal loans are
readily offered by banks as banks are at an advantage when these
loans are taken. Although applicants generally take this loan only
in dire situations, banks often find it a good way to make more
money. Some banks do offer good loan amount when the purpose of the
loan is shared. It is however not a mandate to share the need for
the loan.
The documentation that would be required for personal loans is also very minimal. The income source documentation that is, the pay slips or the bank statements in case of a self-employed or business person, proof of identification, PAN number and age proof would be enough to get the loan processed. When compared the approval for personal loans is always higher than any other loans.