We live in a developing economy like India where the credit infrastructure and the institutional credit rationing processes are still at a nascent stage and are constantly looking to upgrade its functions even more. The primary aim of the banking infrastructure in our country is to regulate the flow of credit and help middle-income people by creating provisions for loan facilities and developing the existing credit system in the economy. In a country like India where personal finances are stressed and people have the tendency to make more expenditure than encouraging savings, loan infrastructure is extremely critical to alleviating the concerns of the lower-income strata of the population of the country. Personal loan occupies a significant place in credit infrastructure.
A meagre amount of money within the ambit of the income earned by them. However, at times, a large fund is required for carrying out important tasks that necessitate the immediate deposit of the monetary figure. During such times of financial distress, personal loan facilities occupy the highest amount of importance in the lives of such people. Following are some of the important details of personal loan facilities-
Definition of Personal Loan Interest rate
Personal loan interest rates refer to the form of a loan that can be taken from banking and non-banking financial companies. It is cash assistance that is granted by the banks which helps in alleviating immediate cash concerns for the interested borrower. Personal Loans are provided at rates of interest which are designated beforehand by the bank which is responsible for providing the loan.
Rate of interest refers to the percentage of fixed charges on the personal loan that is to be paid monthly by the interested borrower. At the time of repayment, however, the borrower can avail the option of paying either fixed instalments of the loan amount or the personal loan amount in a lump sum. Personal Loan is favoured by interested borrowers as it helps them in making large scale purchases and also meets daily expenditures of their day to day lives.
Eligibility of Personal Loan
A person must be eligible for availing the facilities of a personal loan. For availing a personal loan the interested borrower must be employed by a public sector, private sector or a Government sector undertaking enterprise. He must possess the required documentation which is required to be submitted to the banks before availing of the loan facility. The important documents include age certificate proofs, income certificate proofs and other associated documents that need to be ratified by the banks.
For example- Bank of India personal loan grants the facility to the user to avail the personal loan facility by keeping documentation. The speciality of the loan provided by the bank is at nominal interest rates. Nominal Interest Rates refer to the percentage of the loan facility that is payable monthly as an interest amount. During repayment when the loan is to be provided back to the bank by the borrower the borrower may choose to pay the amount in fixed instalment methods where the borrower has to take the burden of paying instalment amounts along with the monthly interest amounts.
Benefits of Personal Loan
Personal Loan offers the benefit of maintaining documents. It ensures safety and stability in the processing of loans as the borrower and his or her transactional history can be tracked and processed within a short period. It also offers the benefit of availing of personal loans at nominal interest rates.
Conclusion
Thus Personal Loan is an important instrument to regulate the flow of credit in the economy thereby strengthening the credit infrastructure of the country also helps in developing the country.
Also Read This-Getting the best Personal loan interest rate
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