The demand for personal loans has increased significantly in recent times. There are multiple reasons behind this. However, one critical reason is the rise in living standards in the country.
Every household/individual has specific financial aspirations and responsibilities, which they want to fulfill. However, due to money being a constraint, these ambitions are left unfulfilled. With an unsecured personal loan, you can overcome these financial restraints.
Whether you are looking for financial support to send your child abroad for higher studies, get him or her married, or go for a long-awaited vacation with your loved ones, you can easily apply for an unsecured personal loan. With technological advancements, you can now get your personal loan within a few hours by applying online.
Let’s look at the things you need to understand while applying for an unsecured personal loan online.
What is an Unsecured Personal Loan?
In simple terms, an unsecured personal loan is a loan, which is not backed by any collateral securities and can be availed to fulfill personal requirements. This loan can be borrowed from any banking or non-banking financial institution (NBFCs). Moreover, since there is no collateral in case of such loans, if the borrower defaults, the lender cannot sell the borrower’s assets to make up the loss. For example, in case of a home loan, the loan is secured by a mortgage of the home/property for which the credit has been taken. In case of default, the lending institution will auction the property to recover the money. In the case of unsecured personal loans, the lending institution cannot sell any material aspect of the borrower to recover its funds.
Also, the borrower can use the funds for various personal needs. It can be for a child’s marriage, higher education, renovation of the home, purchasing the latest appliances and even financing any emergency. The purpose of availing a non-collateral loan can vary from consumer to consumer, and the uses can be innumerable.
The tenor for such loans could range from 12 months to 60 months depending on the consumer’s financial ability and the lending institutions repayment policy.
The loan amount is dependent on the borrower’s earnings and the nature of his or her profession. In the case of a salaried individual, the loan amount is calculated based on the monthly salary. For a self-employed professional, the latest profit and loss statement becomes the basis of calculation.
Generally, the maximum loan amount disbursed is calculated in a manner that the monthly installments do not surpass half of the individual’s monthly income. If you want to check how to calculate personal loan EMI, you can use various personal loan EMI calculators for that purpose. In the case of both salaried and self-employed borrower, the existing liabilities – loans, debt etc., are taken into account to calculate these loans. There is no minimum amount when it comes to unsecured personal loans. However, most financial institutions and non-banking financial companies disburse unsecured personal loans up to Rs. 25 lakh.
Eligibility for Unsecured Personal Loan
Since no collateral components back these loans, both financial and non-banking financial companies like Bajaj Finserv require their customers to meet specific eligibility criteria. Some standard eligibility criteria for personal loan include:
- Age of the customer or the borrower applying for credit online
- Occupation of the borrower – self-employed or salaried
- Income or earnings of the customer
- Place of residence and financial capabilities
These are essential criteria checked by every lending institute before disbursing loans. Besides these general eligibility criteria, the lending institute also monitors the credit history of the customer as well as loan repayment track records.
How to apply for unsecured personal loan online?
It is easy to apply for personal loan online. For quicker loan processing, visit the lending institution’s website, and fill in the application form for the personal loan. Once you fill the same and submit the required documents, you can get instant approval on your credit.
The documents required to apply for a loan include:
- Identity proofs of the borrower – KYC documents.
- Income proof – Salary slips of the recent months in case of a salaried employee. For a self-employed individual, ITR file (recent or the latest one acknowledged) must be uploaded.
- Address proofs – Voter ID, Passport, Aadhaar card, and others.
- Bank statement of the previous 3-6 months
Once you submit these documents, your loan can be processed instantly.