Personal loans are aimed to pay for all financial shortfalls experienced in buying any necessity or luxury. It can be used for all types of purchases like home, car, vacation, education, or any luxury good that is beyond one’s financial reach. Many people are using this loan to fuel their needs and paying back the same in monthly installments.
This loan is offered by most of the banks and non-banking financial company (NBFC) by making some simple checks like employment history, repayment capacity, monthly income, and credit history. The loan is simple to avail but interest rate is higher compared to other loans.
How is this loan different from home loan and car loan?
Home loan and car loan are offered against some collateral whereas personal loan is unsecured loan offered without any collateral. In event of non-payment of loan, lender would not auction or forfeit any property, gold, or other collateral. Due to higher perceived risk for the lender, the interest rate is usually kept higher.
Uses of personal loan?
Personal loan can be used anywhere you feel fit. The lender would not monitor where you spend your money! Usually these loans are used where home loans and car loans don’t work. Home renovation, holidays, education, appliance purchase, business development, and all other unforeseen expenses can be paid with personal loan.
There are many personal loan lenders out there who may differ in their services based on the interest rate, loan tenure, and certain administrative terms.