Why spend your own money when you can borrow it? Is there a medical emergency in the family? Well, worry not! Visit a financial institution to borrow some money. Do you need funds for your daughter’s education? Great! There is a counting house right next door calling you to offer you funds. Are not those air conditioners and the computer you just checked out in that store, worth a buy? Don’t think much! The exchequer across your lane wants to help you gather money for the durables.
Loans granted for personal use are personal loans. These loans assist in getting funds from financial institutions for a person’s personal use. In return, the investment firm demands an interest which is a fee for granting the loan.
What’s what of Personal Loans, Interest Rates, and Charges?
Redemption of personal loans is usually done in fixed instalments across all exchequers. However, there are certain points we need to keep in mind before we finally transact with an investment firm. There, of course, are a few charges that apply to transact the loan. The borrower bears these charges. The charges include a processing fee for the transaction, penalty for a bounced cheque, late payment charges, and the like.
Personal Loan Interest Rates vary from lender to lender. The interest rates are highly competitive but make a huge difference if the loan amount is high. In addition to this, there are a few cardinal things you need to know.
- Credit Worthiness: Personal loans are undividedly given considering the credit-worthiness of the borrower. Alternative factors like your organisational status and income details stand unexamined.
- Short-term Loans: Leisurely repayment terms encourage people to take personal loans. Yes! The repayment provisions with regard to personal loans are hassle-free. The tenure of this loan is generally 12 to 60 months. The borrowed amount clubbed with the interest rate is calculated for the entire tenure. Then the EMI is computed which the borrower needs to pay on a monthly basis in most cases. The interest rate range currently is 12% to 18% depending on the financial institution and the credit risk of the borrower.
- Take for Any Reason: There is no compulsion to specify the reason for taking a personal loan. The loan can be taken for any purpose. It is at the borrower’s discretion to decide what needs to be done to the money credited by the financial institution.
- Almost No Documentations: A personal loan is free from tedious documentation and lengthy procedures and formalities. It can be granted within 24 hours as well.
- Collateral Free Loan: There is no collateral needed for a personal loan. This indicates that there is no fear of any security being forfeited or any asset being attached in case a borrower fails to repay the loan. This gives personal loans an edge over other loan categories.
It is imperative to read, think and gain enough knowledge before even considering a financial decision. One must consult people and refer to as many genuine articles as possible to take the correct decision. Peter Drucker once quoted, ‘Decision making is the art of problem-solving’.