What is a personal loan?Personal loan is a type of loan where you borrow money to fulfil a variety of needs and wants. Mostly, in a personal loan, you are free to use the funds any way you wish, like paying for a vacation, debt consolidation, etc. It is mainly availed for financing large purchases.Features of Personal Loan:No need for collateral.Interest rate depends on your Income and credit history, where interest rates can go up to 130% for risky borrowers. Insane, right?Loan tenure is from 3 to 60 months depending on the amount. Minimal Docs enough – ID proof, Address proof, Income proof.Faster Processing Time where loan is processed within minutes.Common reasons for taking out personal loansBuying a GadgetMedical EmergencyEmergency Expenses.VocationWeddingDebt consolidation, where you clear all your high interest rate debt and credit card debts with one single personal loan.Downpayment for house.Vehicle financing.To start a new business.Improve your credit history. 4. When personal loans are beneficial than other types of creditWhen you don’t have any collateral/assets with you.When you need the loan on the same day.When there are many different expenses.When you like to pay fixed EMIs than varying EMIs.When you are thinking of opting for a credit card for money needs, also check the interest with the personal loans as they can go way beyond credit card interest rate if you are a risky borrower.
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