Answered: 4 questions about the term ‘personal loans’ in India

The hammer of sudden financial exigency can befall upon anyone, without any sort of prior warning. Thus, at such times, a personal loan becomes extremely handy. The new-age financial institutions offer these loans at way lower interest rates than the traditional financiers. Further, the banks and NBFCs (non-banking financial companies) even provide you with the alternative to either apply for it online or through the offline procedures. Therefore, today in this article, we will be answering the 4 most asked question related to personal loans in India, and they are here as follows:

· What is a personal loan?

Personal loans are the unsecured form of financial assistance provided by the banks and NBFCs (non-banking financial companies). Therefore, you can make use of the loan amount without providing any collateral to the financial institutions. Further, you can pay off your medical bills, take care of wedding expenses, consolidate your impending debt, or even fund your trip by making use of the loan amount. Further, the repayment of the loan is done in the flexible form of EMIs (equated monthly installments) over a period of time; thus, you can easily plan out and repay the borrowed sum.

· How do I calculate my EMIs?

The financial institutions provide you with an EMI calculator to compute the repayment of your personal loans. This tool is available on the online websites of banks and NBFCs for free. Or else, you can even find this tool on an aggregator website. An EMI calculator provides you with installments on the basis of the principal borrowed amount, interest rates charged by the financial institutions and the repayment tenure. Further, you can even compare loan products by making use of the multi-variant feature of an EMI calculator. This tool saves you from the hassles of making multiple trips to the financial institutions and wasting exhausting hours to obtain a quote- now you can do it from your home or office.

· How can I apply for a personal loan?

The personal loans are sanctioned by the financial institutions after scrutinizing your profile, credit score, income, job stability as well as your current debt obligations. Therefore, you can apply for these loans, only after meeting the requisite eligibility criteria set by the banks and NBFCs (non-banking financial companies).

· Can I apply for a personal loan, if I have a bad credit score?

The answer to this question will vary from one financial institution to another. After all, each and every financial institution has a different set of eligibility criteria that you need to meet. Therefore, one lender might sanction your loan, whereas the other could reject it. Hence, the answer to that question can only be provided by that particular financial institution. However, if you ask us, it is better to improve your credit score before applying for a personal loan. The reason being; your credit score is one of the factors on which the financial institutions determine your interest rates; lower credit score will result in higher a personal loan with higher interest rates.