Home Finance 6 Types Of Personal Loans That You Can Take In India

6 Types Of Personal Loans That You Can Take In India

Personal loans

A personal loan is one of the fastest and most sought-after loans that individuals prefer in India to finance their emergencies. With zero collateral and minimum documentation, you can get funds in your bank account with minimum delay. Do you know that there are various kinds of personal loans? Let us learn more about personal loans in this article.
What Is A Personal Loan?

An unsecured loan type that one can borrow from financial institutions to fund their financial needs is known as a personal loan. There is no specific reason for which you can take a personal loan. Some of the common reasons are:

  • Weddings
  • Education
  • Vacation
  • Medical Emergency
  • Home Renovation

What Are The Different Types Of Personal Loans?

A personal loan can be taken for various purposes mainly of 6 types. Mentioned below are the types along with their necessary details.

  • Unsecured loans:

An unsecured personal loan is not backed by any collateral such as a home or car loan, making it riskier for lenders. The personal loan interest rate due to this reason is higher than other loans. The approval and the APR (annual percentage rate) on unsecured personal loans are mainly based on your credit score.

  • Secured loans:

As the name suggests, secured loans are backed by collateral, which can be seized by the lender if you default on the loan. Some examples include mortgages and car loans. The rate of interest is lower than the unsecured loans, as they are less risky for lenders.

  • Fixed-rate loans

Most of the personal loans are fixed-rate i.e the rate and monthly payment (EMI) stays the same throughout the life of the loan. If you are concerned about the increased rate of interest, then this is a good option that will lead to a consistent payment each month, thus easier on budget.

  • Variable-rate loans

Unlike fixed rates, in this case, the interest rate is tied to a benchmark rate which is set by banks. The rate of loan varies based on the fluctuations in the benchmark rate, also affecting your monthly payments and interest cost.

  • Debt consolidation loans

Debt consolidation loans help you consolidate your multiple small amount loans into one single new loan. The loan must carry an interest rate lower than the existing debt so that you can save on your interest. Consolidating helps simplify the debt payments by combining all the debts into a single monthly payment.

  • Co-sign loans

Borrowers with a thin or no credit history can opt for the co-signed loan. In this case, a co-signer promises to repay the borrowed loan to the lender if the borrower does not. The co-signer acts as insurance for the lender. If the co-signer has a good credit history, it can improve your chances of qualifying for the loan and also enjoy a lower interest rate and more favorable terms on a loan.

These are some of the common personal loans that one can avail of, there are other options too that one can choose like a personal line of credit, payday loan, credit card advances, and many more. You can choose the personal loan option that suits you best and fulfills all your requirements of the loan amount, interest rate, and other necessities. You can use an online personal loan EMI calculator to know all the information.

While there are various loans available, personal loans are one of the simplest and easy loan options available. Some of the reasons to choose a personal loan are:

  1. No collateral: Unlike other loans, which require security for borrowing money, a personal loan comes with no collateral or security. Based on your credit history, income, and personal information you can easily get a loan for all your emergencies.
  2. Minimum Documentation: Personal loan only requires your cash flow statement and personal details like ID proof for verification. Thus, with minimum documentation, you can get a personal loan for managing all your expenses.
  3. Quick Disbursal: Verification, approval, and final disbursal is a long process for a loan, but not with a personal loan. Fullerton India offers a 30 min disbursal of the loan amount in your bank account once the loan is approved.
  4. Flexible Interest rate: The interest rate for a personal loan is not fixed and is mainly calculated by the lender based on your credit history and reliability. If you have a good connection with the lender, you can get the personal loan at a lower interest rate.

A personal loan is an emergency fund that you can avail from lenders whenever the need be. All you need to do is decide which one you want to opt for from the many options given. You can also check with the lender to see what are the services they are offering before choosing a lender. Make your decision wisely as a wrong decision can affect your finances in the long run.

LEAVE A REPLY

Please enter your comment!
Please enter your name here