Whether you are a businessman or an average citizen, when there is an emergency in money, they take a loan. Some of the advantages that attract borrowers to choose a personal loan over other loans are:
One can use it for loan consolidation, emergency fund, improve credit score, low-interest rate, and flexible tenure for various purposes.
The below questions will help you understand why there is a trend of people taking a personal loan over other loans.
What are the loans?
The term loan means credit, i.e. an act where a lender gives money to a borrower. This exchange of money involves charges like interest rate, processing fee etc.
A loan is a term used to refer to a type of credit given to individuals after considering factors like - salary, use of loan, eligibility, where they work etc. In simple terms, this credit means giving money to another person where he is obliged to pay back the total amount with a certain percentage of interest to the lender monthly called the EMI.
Loans can have different nature: Secured Loans, Unsecured Loans, Commercial Loans, Personal Loans.
One of the main reasons why people choose a personal loan - It has various categories and various uses.
What are the types under a personal loan?
Travel loan: This loan is ideal for people who love travelling. Travelling has its expenses, and when you don’t have enough money to spend, one can opt for a personal loan as they give this loan for travel/vacation.
Home renovation: A house loan can be used to buy a house, but it cannot be used to buy furniture, refurbish, or renovate it. For this purpose, a personal loan enables an individual to use funds to refurbish, repair, renovate, pay labor charges, purchase new materials, and do other things..
Pension loan: The pension loans are given to the retired personnel only, so the fundamental eligibility changes in this case. An individual has to submit proof showing the pension. The Personal Loan Apply Online option is also available now. The only individual with a pension is eligible to apply.
Educational loan: Being educated is very important for every individual. Educational institutes like schools and colleges have their fee; if an individual cannot pay them, they can opt for the educational loan from a personal loan. Choosing a personal loan can help them to get funds at a lesser rate.
Wedding loan: Weddings are an essential function in India. Conducting a wedding costs a fortune; to reach the demand of money, not all have their pockets filled; personal loans are the best option to take, as they provide the wedding loan under the personal loan category.
The loan can be taken by the would-be bride, groom, family members.
How is a personal loan different from other loans out there in the market?
The loans are divided into two based on their nature:
Secured ICICI Personal Loan take collateral in the form of security for the money they give, so the bank or the lender gets a backup if they don’t pay on time. Collateral can be in the form of car, house, property, etc. If one doesn’t make the repayments on time or gets outstanding dues and charges, then the lender can seize the collateral.
Loans Like: Gold loan, pension loan, car loan, vehicle loan, life insurance, mortgage loan etc., come under a secured loan.
Personal loan and the commercial loan comes under the unsecured loan.
Conclusion: A particular advantage of a personal loan is resulting in an increasing number of customers. As users number increases, the lender brings up certain new norms under which the applicant is selected. This change is done to avoid unfit applicants, i.e. who cannot pay their repayment on time.
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