One can use your loan for any purpose as long as it is legal. However, there are certain lenders who provide different loan products on the basis of the purpose which is mentioned by the borrower in the loan application. On the basis of utilization, these are the different types of personal loans that can be availed in India:

Note:Do not forget to check the eligibility criteria for the different types of personal loans before you apply for one.

Buy Now Pay Later

Several retailers and banks are offering the Buy Now Pay Later (BNPL)scheme, where borrowers who do not have a credit history can avail a short-term credit. The credit-worthiness of the borrower is done with the help of analytics.

Tips for Using Buy Now Pay Later

Some of the main tips that must be considered when you opt for BNPL are mentioned below:

1. Know your budget.
2. Read the returns policy carefully.
3. Check all the penalties and fees.
4. Understand the terms and payment details.

Personal Loan Top Up

A personal loan customer can avail an additional loan amount through the top-up facility over his/her existing loan. The loan amount will be subject to the terms and conditions set by the financial lender, while the interest rate may be the same as the existing loan or could be up to 1% more than the interest rate of the current loan. The tenure of the top-up personal loan will be subject to that of the existing loan.

Key Features and Benefits

• Existing personal loan customers are eligible for the loan top-up provided that they have paid their EMIs regularly and have no pending payments.
• Quick or instant disbursal of the top-up loan amount.
• Minimum documentation required.
• Zero processing fee offered by a number of lenders.
• No collateral required.

Personal Loan Balance Transfer

The personal loan balance transfer facility gives customers the benefit of transferring their existing loan to another financial lender. This can be done if the other financial lender is offering a better interest rate, the tenure is a lot more flexible, they wish for a top up on their existing loan, etc.

Key Features and Benefits

• Get a reduced interest rate on the existing loan amount.
• Option to top-up the loan.
• Avail flexible repayment options.
• Avail benefits such as zero processing fee, waiver of last EMI benefit, etc.
• To get better customer care service.

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How to Choose the Right Personal Loan

Given below are the steps which you can follow to choose the right personal loan for yourself:

Loan Amount: Before proceeding with your decision to apply for a personal loan, it is crucial to determine the loan amount you require. Once you have established the desired loan amount, you can then calculate the equated monthly installment (EMI) obligations based on the loan amount and tenure. Comparing loan offerings from various lenders allows you to select a personal loan option that aligns with your budget and financial goals.

Loan Repayment Tenure: Choosing a longer tenure reduces your monthly EMI burden but entails paying more total interest over the loan duration. Conversely, opting for a shorter tenure increases your EMI but results in savings on interest payments. Select a tenure that matches your repayment timeframe; for short-term needs, a longer tenure may not be necessary. Look for lenders offering flexible tenure options to find a suitable arrangement that suits your budget and repayment capacity.

Rate of Interest: When acquiring a personal loan, prioritize the interest rate as the primary factor. Strive to secure the lowest interest rate feasible to reduce the overall loan expenses. Well-established banks typically provide considerably lower interest rates compared to private lenders, who might levy excessive rates. Thoroughly research and compare interest rates offered by various banks to discover the most advantageous deal, utilizing online tools to streamline the comparison process.

Minimum Documentation: Managing a protracted application process can be tedious, especially when urgent funds are needed. Many online lenders offer streamlined procedures with minimal documentation, leveraging technology for swift verification and decision-making. Explore pre-approved loan offers from familiar banks or lenders for expedited approval, often requiring minimal additional information. Documentation requirements may vary based on the loan amount, with smaller loans typically involving simpler applications.

Processing Fees: The processing fee is a one-time charge levied by the lender to cover administrative costs associated with handling your loan application. When assessing lenders, consider both their processing fees and interest rates to pinpoint the most economical choice. Avoid prioritizing a low processing fee if it comes with a significantly higher interest rate compared to other lenders.

Zero Collateral: Personal loans are typically unsecured, meaning there’s no requirement to offer collateral as security for the loan. This lack of collateral criteria often enhances the accessibility of personal loans for eligibility, contrasting with secured loans like mortgages or auto loans. Since no assets are pledged as collateral, there’s no jeopardy of forfeiting them if the loan defaults.

Courtesy To : Bankbazzar

About Post Author

Lynn Jackson

aware@srvibes.com

http://www.srvibes.com

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