All You Need To Know About Different Types of Personal Loans

Even the most careful financial planners can fall short of funds at one point of time and might need financial assistance. Although savings can help to an extent, you cannot always rely on your savings amount. A viable alternative is borrowing from the financial institutions through loans which are of two types – secured and unsecured. Secured loans involve the pledging of collaterals with the lenders. In contrast, in the case of unsecured loans, collaterals are not needed, and the lenders assess the income capabilities of the borrowers to provide loans. Personal loans, a type of unsecured loans have become a favourite among the salaried class for the benefits offered.

Types of Personal Loans

Due to the increase in demand for personal loans, the use-cases for such types of loans are sky-rocketing. The personal loan eligibility varies from one lender to another but predominantly based on credit score and income capabilities of the borrower. The lending institutions understand the need of the borrowers and have classified the personal loans into various types mentioned below:

Marriage Loans

For a culturally diverse country like India, marriages are a common touchpoint. Almost every family in the country wants to spend a considerable amount of money on the wedding, and naturally, the expenses can exceed the marriage budgets. Hence you can avail marriage or wedding loans for various requirements as the lending amount varies from Rs.1,000 to Rs.25 lakhs based on your needs. The repayment tenure can depend on the lending institution and the loan amount but is typically between 3 months to 60 months. One of the main advantages of such types of loans is faster processing and minimal documentation which completes the immediate need of funds in case of weddings.

Education Loans

You can avail personal loans for your kids’ educational purposes as such expenses are highly dynamic and can affect your savings. Hence you can use such loans to fund end-to-end requirements of the kids’ education. 

Travel/Vacation Loans

Let’s assume that you want to make a quick business trip and could crack a potential deal if you travel immediately. The only hiccup is that you urgently need finances to move and hence you can avail travel loans to meet your objectives. Also, you can use such loans to fund your much-needed vacation, which comes with additional travel insurances. The loan amount can be up to Rs. 25 lakhs or based on the lender, and the tenure can be up to 60 months. 

Home Renovation

Not many know that you can also avail personal loans for home renovation. Note that such types of loans are different from traditional home loans which are used for the purchase of a house and might not cover the renovation expenses. Home renovation loans empower those who are apprehensive about repairing their old homes due to the costs involved. Such a move works in favour of the homeowner as the real estate value of the house can go up, adding value to the loan availed. The loan amount can range from Rs. 2 lakhs to Rs. 25 lakhs based on the requirement of the borrower. The loan tenure can be up to 30 years with the interest rates starting from 9%. 

Pension Loans

An exclusive feature for the retired section of the society, pension loans are offered by banks/NBFCs with the loan amount up to ten times of the pension amount of the borrower. The loan amount can start from Rs.25,000 and scale up to Rs.14 lakhs, and the loan tenure can range up to 60 months with interest rates of 11.70% and more. Such types of finance options serve as an excellent option for the senior class as they might have issues in getting finances from other sources for their urgent needs.

What is Personal Loan Eligibility?

The minimum age for salaried employees to apply is 21 years while for the self-employed, it is 25 years. The maximum period for salaried and independent would be 60 and 65 years, respectively. Note that the eligibility factors are dynamic and vary based on the financial institution and their policies. To check your eligibility, you can also use personal loan eligibility calculator.

Conclusion

Personal loans can help you in various requirements, and you need to look around for the best options in the market before deciding to apply for the loan. 

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