When you face a financial emergency, applying for a Personal Loan is an excellent way to get the necessary funds. Such a Loan is also advantageous when you want funds without borrowing from your loved ones. It is easy to understand, and you can repay the Loan using smaller equated monthly instalments. Let us understand a Personal Loan, its eligibility requirements, and if you need collateral.

About Personal Loans

Many people approach their loved ones to ask for money when they suddenly need it.  However, you may be aware that such transactions could ruin your relationships. So, if you are unwilling to risk your relationships, you might want to consider applying for a Personal Loan. This Loan is a short-term credit that you can avail yourself of to meet immediate financial requirements.

It is unsecured, and various banks in India offer it. It is versatile, and you can use its funds for multiple purposes. For example, Personal Loans can be used for home improvements, higher education, debt consolidation, medical emergencies, travelling, and more. These Loans have minimal eligibility requirements and are usually processed and disbursed quickly.

Eligibility requirements of a Personal Loan

The Personal Loan eligibility requirements include:

• Income

Your income is often considered the most important Personal Loan eligibility criteria for approving the application. Usually, you hold a better chance of getting your Loan approved if you have a higher income.

• Existing debts

When you have already availed of a Loan and are repaying it, your chances of getting a new one may be lower if you have no other existing debt.

• Location

Your place of residence or geographical location is typically the most essential Personal Loan eligibility criteria. If you live in a metropolitan city, you have a better chance of getting the Loan application approved than those residing in semi-urban or rural areas.

• Credit history

Generally, banks decide the Loan amount, interest rates, and Loan tenure based on your credit score. If you possess a decent score, your Loan is usually easily approved.

Does a Personal Loan need collateral?

Today, you can select a Personal Loan apply online. However, you may wonder if you need any collateral. As mentioned, Personal Loans are unsecured. So, you need not provide any collateral against the sum you borrow. This boosts the convenience of taking this Loan as it eliminates the need for you to arrange the collateral and related documents.

Conclusion

Personal Loans offer multiple advantages to individuals. Besides, the lack of need for collateral can make them a suitable choice when you need funds urgently. However, check your eligibility before you apply for this Loan.