The requirement for instant funding has become imminent in modern times. If you’re one of the many people facing this need, then rest assured that there are several reasonable ways to avail it. In this article, let’s talk about one such avenue that has become one of the best resorts for people in need of instant cash – Personal Loans.
First Things First – What Are Personal Loans?
Personal loans, in essence, are among the most accessible financial tools that people in the modern age resort to for availing quick loans. When you avail a personal loan, a financial institution lends you money at a fixed rate of interest for a predefined period.
This implies that you’ll be required to make a fixed monthly payment during the loan tenure. Unlike a credit card, you’ll also have more certainty when it comes to the amount you need to pay since personal loan contracts clearly specify how much you’ve borrowed and how much you need to pay every month until the debt is repaid. Furthermore, personal loans are unsecured in nature, which means that they don’t require any collateral or guarantee either.
Types of Personal Loans
- Unsecured Personal Loans: Generally speaking, most personal loans are unsecured in nature, which means that they aren’t backed by any collateral in the form of land or property.
- Secured Personal Loans: These loans, as the name suggests, are backed by collateral that can be seized if the borrower defaults on the loan.
- Fixed-Rate Loans: Most personal loans carry a fixed rate, which implies that the monthly instalments and rate stay the same for the lifespan of the loan. Such types of loans make sense if you want consistent payments each month and if you’re concerned about rising rates on these long-term loans.
- Floating-Rate Loans: In such type of loans, the interest rate is tied to a benchmark rate set by the financial institution. Depending on how the benchmark rate fluctuates, the rate on your loan – and, conversely, your monthly instalments – can rise or fall.
- Co-Signer Loans: This loan is for borrowers with little to no credit histories who may not qualify for a loan on their own. In such a case, the co-signer promises to repay the loan in case the borrower fails to do so.
Elements of a Personal Loan
Personal loans can entail different things depending on the borrower’s credit score, income, age, borrowed amount, and the lender’s rate schedule. Here are some of the elements of a personal loan that you need to know about:
- Interest Rate: In essence, the interest rate is a certain percentage of the loan amount that you will have to pay on top of the principal loan amount. These rates are usually fixed, which means that they remain the same throughout the life of the loan.
- Loan Tenure: This refers to the amount of time that the borrower has to pay the loan back. Personal loans usually have a fixed term, which means that the monthly instalments will be the same throughout. The tenure can range from just a few months to six years or even longer.
- Prepayment Penalties: Some personal loans come with the stipulation that you will be charged penalties if you pay back the loan amount before the mutually agreed-upon term ends. This makes it essential to check the prepayment penalties before finalizing your decision.
- APR: This is primarily the total annual cost of borrowing a loan. It can range from very reasonable to extremely high, depending on the borrower’s credit score.
- Other Fee: Some lenders can attach various types of fees to their personal loans, such as origination fees and service charges. An origination fee, as the name suggests, is the amount you pay at the beginning of the loan for getting it set up. It’s vital that you read the papers carefully for what fee you’ll be liable to pay before signing anything.
Eligibility Criteria for a Personal Loan
At Clix Capital, we aim to make the loan process as hassle-free as possible. We only ask that you meet the following criteria:
– An Indian resident
– Between 21 to 60 years of age
– Salaried or self-employed
– Holding a clear financial history
We don’t want to overwhelm you by asking for too many documents. We require basic documentation like:
– Proof of address
– Identity proof
– Age proof
– Passport size photograph
– Signed application form
– Bank statement justifying the salary