The unsecured loan that can be easily availed is the personal loan. Unlike home loan and car loans, personal loans can be easily obtained as there is no need for any security guarantee to get the desired amount. This type of loan is approved on the basis of one’s income, employment and credit history, alongside repayment capability.
As there is no need for any security asset, most people are drawn towards applying for a personal loan in case of any emergency situation or sudden expenses situation. However, due to the absence of the security asset, the interest rate on personal loans is always on a higher side in comparison to home or car loans.
When to Take a Personal Loan?
As aforementioned, personal loans are easy-to-be-availed loans in any financial need or emergency. One can take a personal loan while facing unexpected expense rise in weddings, planning an international holiday, seeking higher education, applying for studies abroad, renovating one’s home, alongside making the initial payment for buying a new property, investing in a new business or even upgrading one’s car. As banks don’t monitor the usage of funds availed under the personal loan, people prefer taking applying for the same.
Points to Ponder
As lucrative as it may sound, personal loans are also a liability for the borrowers. Thus, it is important to consider a few points before taking the step to avail the loan.
Interest Rates – As mentioned earlier, there is no need to have any security asset while applying for a personal loan, the interest rates are also on a higher side. One must check the interest rates of various financial institutions and banks before zeroing down on any one bank. The interest rate offered by Tata Capital is in the range of 11.49% – 19% pa.
Prepayment Charges – Few banks do not allow prepayment of the loan amount before a certain period of time, or before a few EMIs are paid off. Thus, it is important to understand the prepayment policy before availing the loan.
Need or Greed – It is very important to understand the intention of applying for the loan. Whether there is an actual need such as hospitalization, marriage, education, or any other type of emergency; or whether the need is artificial like investing in stocks to enhance one’s savings – needs to be evaluated.
To make sure one’s loan request is processed, the following set of documents need to be submitted to the bank or the financial institution.
- Income proof for salaried professionals or ITR documents for self-employed
- Address proof documents
- Identity proof documents
- Educational certificates along with business licenses in case of self-employed professionals
If you are looking to avail a personal loan, it is useful to consider Tata Capital as one of your options. The loan is disbursed in about 72 hours and one can apply for the loan online as well. One can check the personal loan EMI calculator and get an idea of the monthly payments that they need to make, before applying for the loan.