Personal loans can be a great solution for dealing with all kinds of financial emergencies as it is a collateral-free loan and comes with limited documentation and quick processing. It is also known as the low-interest rate personal loans.
Features of personal loans are as follows:
• Complete flexibility on using the loan: People prefer to choose personal loans as there are no restrictions on using the loan amount unlike other forms of credits such as a home loan or auto loan where the amount can be used only to purchase a property or vehicle respectively. A personal loan gives the freedom to make use of money in any way you want.
• No collateral required: Since Personal loan falls in the category of ‘Unsecured loan’ so lender gives a loan based on the creditworthiness or your credit score and not ask for any assets to be attached against the loan. It results in making quick loan processing.
How much is the loan amount or a loan tenure of the personal loan?
A borrower should always make sure that the amount you apply for a loan should matches perfectly with your ability to make repayment. Lender gives the loan amount approval based on the lending criteria used by NBFCs or banks.
Loan tenure
It ranges usually from 1-5 years
Factors which make it possible to get the low-interest rate personal loans are as follows:
1. Good credit score: It is good to have a credit score of 750 or above to qualify for a personal loan of low-interest rates. Better is your score, higher would the chances of getting the loan approval.
2. Employment status: Your employment is an important factor taken into consideration in the loan-approval process. As it is a collateral-free loan, lenders need to make sure that your job is steady over the loan period. The borrower must be working with the same employer at least for a year before filing the personal loan application.
3. Your annual income: For an unsecured loan, banks want to be fully assured that the borrower is having a good salary that will allow you to make an easy monthly repayment. The higher your income, the better your chances of being loan approved.
4. Your EMI payment record: Lenders check your credit reports to know how much you are you have financial disciplined and understand in which pattern you are making your EMI payments. If you are regular in making credit card payments and fulfilled your debt obligations, they will be inclined to view your loan application more favorably.
Conclusion
Getting the personal loans at a low-interest rate is much more than just getting your desired finance. This financial product designed to give you the best in return for being a customer.