Unsecured Loans

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Unsecured Loans

An unsecured loan is a loan that is issued and supported only by the borrower’s creditworthiness, rather than by any type of collateral. Unsecured loans—sometimes referred to Signature Loans or personal loans—are obtained without the use of the property or other assets as collateral.

A Personal Loan is a viable way to fund anything from Emergency to a holiday abroad to your child’s education and a home renovation to a wedding in the family. One can avail of a loan without any collateral or security for a pre-decided period of time at a particular rate of interest. In order to apply for a loan and minimize the risk of lenders, the borrower will need to provide proof of employment and income along with sufficient identity proof.

You might have planned your finances diligently and with utmost care. But there will be situations where you are caught unaware and have unexpected bills to pay urgently. At such junctures, when you have very few options left to arrange money, personal loans can come in handy. But once you have taken a personal loan, you need to pay the EMIs that include principle repayments as well as interest payments. It is then your duty to find options that can help you reduce your interest costs and EMIs. This is possible if you can transfer your personal Loan to a financial institution, which offers lower rate of interest.

Process for Personal Loan:

Eligibility: Lenders have set minimum eligibility criteria for their personal loans. This can include any of the following

  • Age: You will need to be 18years or older to apply for a loan in most states. Some states require you to be 19 year or older.
  • Income: You may need to earn over a certain amount to be eligible to apply for a loan. Check with the lender for any annual income requirements.
  • Employment: Most lenders will require you to be employed and working in a stable job.
  • Residency: Must be an Indian citizen, a permanent resident of India.

However, even if you meet the minimum requirements for a loan you won’t be approved unless you can prove you can afford the repayments. Lenders determine this by looking at your income, your debts and the stability of your employment.

Application: The application process for a personal loan differs between lenders. Generally, you will have the option of applying online, in-branch (if the lender has branches) or over-the-phone.

  • ID: You will need to provide your driver’s license, passport or another form of government-issued identification.
  • Proof of income: Depending on the lender you may need to provide three to six months of pay stubs, bank account statements and/or two years’ of tax returns if you’re self-employed.
  • Other financial documents: If you have other debts, such as loans or credit cards, you may need to provide statements from those accounts.
  • Online applications: Usually take just a few minutes to complete if you have all your information ready.

Approval: Some lenders can give you an answer instantly while others may take a few days or weeks to approve. There are two forms of approval: full approval and conditional approval.

Conditional approval usually takes less time but is given on pending more information from you, such as additional pay stubs or documents relating to your assets or debts. Lenders may just ask for this information and not offer any conditional approval. This is to help them make a more informed lending decision.

Full approval is given when you have supplied sufficient information for the lender to make a decision on your application.

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