Types of Personal Loans
Personal loans are availed and provided for meeting personal needs. If you are availing a personal loan, banks may or may not ask you to specify why you are borrowing the money.
Personal loans are very easy to get in India, especially if you have the right documentation in place and good CIBIL Credit score. All Banks and many NBFCs are offering Personal loans which are normally small loans, and the loan amount typically ranges between Rs50k to Rs40 Lakh for salaried and Rs1 Lakh to Rs5 Lakh to Self Employed and Self Employed professionals.
Personal loans are unsecured and it doesn’t required any security or collateral. Unsecured loans normally have higher interest rates than secured loans due to higher degree of risk incurred by the lender.
There are 3 types of Personal Loans basis type of employment which is (1) Personal loan to salaried employee, Personal loans to self-employed and Personal loans to self-employed professionals (CA, Doctors & Architects)
One the basis of usage , there are major 6 reason for which people avail personal loan in India.
1. Festival Loans
Leading banks in the country normally provide these loans at discounted rates during the festive season to drive up the amount of loans availed. It is the best type of loan for individuals who need to borrow a quick and small amount of money
2. Marriage Loans
In last coupler of years many people are taking are personal loan for expenses incurred in Marriage. This is a type of personal loan that has surged in popularity in recent years. The amount borrowed for a marriage loan is normally like any personal loan , dependent on a person’s financial background, age and credit worthiness. The interest rate is often determined by the current market rate and rates.
3. Vacation Loans
Many people across the country take loans for vacations inside or outside the country. People take more vacation is also result of lucrative offers by many travels companies and VISA norm relaxations offered by many courtiers. like any personal loan , dependent on a person’s financial background, age and credit worthiness. The interest rate is often determined by the current market rate.
4. Education Loan
Education has become more expensive as compared to it was during 90s or before that period. Also many people go to abroad for higher education and typical Education loan may not support that course or university hence people take personal loan to support Education expenses. Like any other personal loan , this too dependent on a person’s financial background, age and credit worthiness. The interest rate is often determined by the current market rate.
5. Medical Expenses Loan
Many family faces at the time of medical emergency is affordability of medical expenses. Medical costs are rapidly increasing and people do not have enough accumulated wealth to get medical treatment from the hands of expert. It is really a pathetic condition that people are denied access to it because of financial unaffordability, though there is a tool of health coverage that makes it both affordable and accessible but majority of people in India are not insured may be because of lack of knowledge or their unwillingness to buy it .Like any other personal loan , this too dependent on a person’s financial background, age and credit worthiness. The interest rate is often determined by the current market rate.
6. Home Renovation or Improvement
Because of the quick process and good amount offered many people are availing personal loans for home improvement and renovation purposes. The process for applying for personal loans have become so simple that it takes just 3 to 5 working days so rather than taking top-up on existing home loans people are preferring personal loans. Like any other personal loan , this too dependent on a person’s financial background, age and credit worthiness. The interest rate is often determined by the current market rate.