Types of Personal Loans in India

31 Oct 2022

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Loans fulfil quick cash requirements and are thus anyone’s best financial friend in times of need. With skyrocketing prices and limited income, it's hard to save from your earnings or make short-term financial investments. So, where do you find funds when you need them immediately? Several types of personal loans are first partner of choice for emergencies and money management mantras for smart spenders. Taking loans are not a bad habit if you can repay timely in disciplined manner.

Types of Personal Loans in India

Personal loan are the most convenient financial backups offering the confidence you need in emergencies filling the immediate cash crunch with the flexibility of returning at your convenience. Banks, non-banking financial organizations and private money lenders are ready to finance various types of personal loans when you want extra money for a better life. But just as James Grant, the American financial wise owl remarked, “If loans are expanding too quickly, the lending officers have probably been saying ‘yes’ too frequently,” so ensure that you choose a dependable source when taking loans. That way, your debts won’t exceed repayment capacity. This article encapsulates different personal loan types and what to expect from each.

Pre-approved Personal Loan

When you need immediate cash, choose a dependable lender that fosters accountable borrowers. Your pre-approved personal loan is disbursed in a day and is preferred over credit cards. You can loan a higher amount with a low-interest rate. Choose from personal loan types if you have a good CIBIL score. These types of personal loans allow the borrower to get an unconditional loan without mortgaging or pledging any asset, making them expensive. Entrepreneurs treat this as a stopgap for raising funds to meet urgent financial needs. Personal loans auto debit equated monthly instalments (EMI) from your bank account. These are short-span loans with subjective repayment terms.

Medical loan

Among personal loan types, is the medical loan, a financial backup for any medical emergency like hospitalization, medicine, surgery and other expensive medical treatment. This loan like other types of personal loans do not require collateral and thus has high-interest rates and repayment through EMIs linked to bank account. This loan is a lifesaver in your most trying times.

Personal Loan for Home Renovation

In Bank of Baroda, there is a dedicated product namely “ Baroda Home Improvement Loan ” which fulfils the requirement of existing Home Loan borrowers for repairing / renovation of their dwelling unit. However, Bank also provides Personal Loan for shorter period ranges from 12 months to 84 months for any purpose other than speculation.

Personal Loan for Travel /Vacation

Holidays break the monotony of mundane life, but at times, failing funds stop this indulgence. Why not choose a travel loan? Travel loans falls under types of personal loans that help you to cover your vacation expenses like tickets, hotel, food and other expenses and even sightseeing. This loan is available as any personal loan type for both domestic and international travel. With a high-interest rate be mindful of the finer details that this personal loan type includes. This is an instant approval loan scoring higher than credit cards.

Personal Loan for Marriage

Weddings can be extravagantly expensive. You want to gift your children or yourself a memorable occasion. To ensure that you can meet the expenses you might need a marriage loan. A marriage loan is among the ideal personal loan types for planning dream weddings. From jewellery to a lavish event, a marriage loan will take care of every spend. The personal loan for marriage follows the same criteria as any other types of personal loans in India. The minimum age for taking this loan is from 21 -23 years and the maximum from 58 -65 years. The loan amount is subject to minimum net income. Personal loan for wedding serves the purpose of wedding anniversaries too.

Personal Loan for Debt Consolidation

Personal Loan for Debt Consolidation is an easy way to pay off loans you may have missed. Medical, travel, house building, credit card debts or other unpaid loans are grouped, and a consolidated sum is fixed for repayment. This personal loan type prevents paying multiple EMIs, failing one of which will affect your CIBIL score. Debt consolidation personal loans are similar to other types of personal loans.

The Bottom Line

Personal loans have a tempting choice of options to spoil you. These attractive and easy personal loan types urge you to avail them. However, before you go ahead with a personal loan, ask yourself why you need one, can you handle the repayment amount timely and smoothly? Make sure you have all the documents required for personal loan. Check your credit score, weigh the pros and cons and above all choose a dependable source like The Bank of Baroda to ensure that your loan repayment is hassle-free and well managed. After all, how you manage your finances determines your lifestyle. So, get smart and manage your loans well.

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Personal Loan Processing fee and Charges

Loans are backbones that offer a financial equilibrium. As India prepares to enter the festival season, it's time to amp your finances. Spendings are on an upward spiral from September to December for almost all families across the nation. Indian festivals are elaborate and expensive, but if you have your financial goals sorted, getting a loan should not be a problem. While saving for the festival every month is a great idea, it may not be sufficient. So some manage their festival season’s financial overheads with loans quite effectively. Learn more about the nuances of personal loan processing fees and personal loan process steps (PLPS). This complete insight will make loan procurement a more informed exercise.

A Complete Guide to Personal Loan

A personal loan does not require the borrower to provide collateral and so it is an unsecured loan. The purpose or intention of a personal loan is to fund immediate financial contingencies. It could be for business capital, marriage, medical expenses or even foreign trips, though the end use of the capital really depends on the borrower, as long as it is for a legitimate financial need.
Eligibility for a personal loan?
Since these loans are unsecured- at what rate of interest you will get the loan and how much, whether or not you will get the loan-depend on the credit quality of the borrower. If you have good creditworthiness, you are likely to get the loan at an attractive rate of interest. If you have been a long time customer with the bank, with sound track record of financial discipline, you may also get a pre-approved personal loan sanction.
Bank of Baroda lists the following types of employees/self-employed individuals who are eligible for personal loans.

Employees of Central / State Govt. / Autonomous Bodies/ Public / Joint Sector Undertakings, Public Limited Co. / MNCs & Educational Institutions – with minimum continuous service for 1 year
Employees of Proprietorship, Partnership firms, Private Limited companies, Trust - with minimum continuous service for 1 year
Insurance Agents- doing business for minimum last -2- years
Self Employed Professionals (Doctor, Engineer, Architect, Interior Designers, Tech. and Management Consultants, Practicing Company secretaries etc) -- with minimum 1 year stable business.
Self Employed Business persons - with minimum 1 year stable business.

Some of the benefits of a personal loan are
Urgent financial requirement
If there is an immediate need for money, personal loans are the best option. They are considered better than credit cards or loans from family members or unorganized lenders, since the rate of interest is reasonable and the lender is a credible organization. Credit cards come with strict credit limits, which is not the case with personal loans. Funds taken from the bank as personal loan also resolve the issue of certain vendors not accepting payment through credit cards.
Breathing time for repayment
Also, the credit card bills need to be paid off by the due date which generally falls in the next month whereas you get some breather in repaying a personal loan EMI over a period of time, generally ranging from 3-4 years.
Flexibility of use
Funds from a personal loan are flexible in the way you use them. They can be used for several purposes- home renovation, travel, wedding and medical expenses or for any other purpose as per one’s personal obligations..
Loan amount
The loan amount you can borrow under a personal loan is also significant. For example, with Bank of Baroda offer personal loan amounts based on the eligibility of applicants
Personal loans may also be private loans since these loans are often used to meet cash requirements or personal contingencies and thus kept private to a great extent.
Flexible repayment structure
These loans are generally of the nature of short to medium term loans and come with a flexible repayment structure.
Easy to get
For example, Bank of Baroda is popular for personal loans that are quick to get, fast processing, minimal documentation required and offered at attractive rate of interests. Most salaried persons, self-employed and professionals can apply for these personal loans.

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