What are Personal Loans?
These loans are short-term borrowing and are unsecured loans. In most lending structures, a person can get both secured and unsecured loans. The secure loans are against security or collateral. For example, if you apply for a mortgage, the bank will make lien on the property and hold it as security. In case you default on payments, the banks have the right to sell the security and recover its dues. So, in the secured loan, the lender is safe as he holds your collateral. There are also more options for secure loans where a person can borrow more capital and get better interest rates.
Personal loans are unsecured, and when you apply for these borrowing, you do not have to provide the lender with any security. These are short-term borrowing, and the amount is also up to a specific limit. You cannot get massive capital through a personal loan. Unlike a secured loan, since personal loans are unsecured, the lender will do a complete check of the applicant, especially the credit report, i.e., the history of the applicants on all previous borrowing. Personal loans also carry a higher interest rate.
The benefit of Personal Loans
The burrowing is useful for immediate expenses. People who have pending utility bills, credit card payments, tuition fees, or medical bills can avail loans and settle all urgent outstanding bills.
To apply for the Personal Loan.
You should be at least 18 years of age, and maintain an account if you go to a bank for the loan. Some other lenders provide fast cash borrowing, but they will only allow a small amount of money. You also need to provide valid identity, proof of residence, and source of earning that can be anything from salary slips to a letter of employment.
Eligibility for Applying for Loan
Generally, anyone who is 18 and older can apply for a personal loan. When applying for a loan through a bank, they should also have an account with the bank. Further, the person applying for the loan must possess a good credit history and a stable source of earning. If an applicant is fulfilling the mentioned criteria, then he is eligible to avail loan facility.
Options for Personal Loans
There are many options to apply for these personal borrowing. A person can find online lenders, take assistance from a loan broker, or can go to some banks and apply for the loan.