What is Personal Loan - Know about Personal Loan

Personal loans are an unsecured type of credit extended by financial institutions depending on factors such as the borrower's employment record, repayment history, income, and industry. A personal loan, sometimes called a "consumer loan," can be used for practically anything in the present day. Now that you know the personal loan definition, keep on reading to find out more about it and the personal loan application form.

Do you know the maximum amount you can borrow?

Know more about, the maximum personal loan amount. One's ability to borrow a loan is proportional to their regular monthly income. Consideration is given to both monthly income and outgoings when determining the loan amount. Lenders typically set the maximum monthly payment on a loan such that it doesn't exceed 40% - 50% of the borrower's gross monthly income. In addition to your credit history, the lenders will consider any payments that are past due.

What are the eligibility criteria?

Personal loans are available to both salaried and non-salaried borrowers. A person must be at least 21 years old and younger than 60 years old to apply for a personal loan (for salaried individuals). Self-employed people can't be older than 65 years old. The applicant's monthly income must be at least Rs.25,000 per month.

What are the benefits of a personal loan?

Now that you know the personal loan definition, you should also know what its benefits are. Personal loans have a shorter application process and a lower document threshold than secured loans like mortgages and gold loans. They can be disbursed within a few hours if the lender is confident in your ability to repay the loan.

You can choose the duration of your loan, which is a major benefit of personal loans, from the lender. The standard term length for a Personal Loan is between one and five years. To that end, the loan length is flexible, so you can choose an option that best suits your needs. A shorter loan term will allow you to pay less interest during the life of the loan.

With the knowledge you've gained about Personal Loans and knowing about personal loan definitions, you can easily apply for one online after comparing the rates and terms of several lenders.

Read Also: 8 Easy Ways to Apply For Personal Loan with Bajaj Finserv