What is a Personal Loan?
A Personal Loan is an unsecured type of loan where an individual borrows certain amounts from any Bank, NBFC, or other Financial Institution. They are an unsecured loan, so they don't require any security or collateral. Various features of this loan, such as loan amount, interest rates, repayment tenure, etc., are determined based on the borrower's creditworthiness.
A Personal Loan can work as a straw in your financial drowning situation. Whether you're planning your dream wedding, facing a medical emergency, funding your child's education, or consolidating your debts, a personal loan provides the financial flexibility you need without putting your assets at risk.
How Does a Personal Loan Work?
A personal loan works by providing individuals with a lump sum of money that they can use for various personal expenses and repay within the given repayment tenure, keeping the interest rates in mind. Let's break down the steps for you:
- Personal Loan Application Submission - Fill out the application form with your personal and financial details
- Eligibility and Credit Check of the Borrower - Lenders evaluate your credit score and repayment capacity
- Loan Approvals - Get approval based on your credit profile and income
- Disbursements - Receive the loan amount directly in your bank account
- Repayment terms - Agree on EMI amount and repayment schedule
- Monthly Payments - Pay EMIs regularly through auto-debit or manual payment
- Prepayment and Penalties - Option to close loan early (terms vary by lender)
- Use of the Loan for Various Reasons - No restriction on end-use of funds
- Completion of the Loan - Loan closure upon complete repayment
Features of a Personal Loan
Loan Amount: This is the fixed amount that the borrowers get from the lender. This amount is based on the creditworthiness and income of the borrower. At Vision Paid, we help you get loans ranging from ₹50,000 to ₹50 Lakhs.
Interest Rates: The interest rate is the cost of borrowing the money and is expressed as an annual percentage rate (APR). Personal loans may have fixed or variable interest rates. We help you find the lowest rates starting from 10.5% per annum.
Loan Term: This is a pre-determined tenure the borrower must follow to repay the loan amount. This can also be manipulated based on the creditworthiness and income of the borrower. Choose tenure from 12 months to 84 months.
Repayment Schedule: In the repayment schedule, the lenders outline the frequency and amount of each borrower's payment to repay the loan. The payment frequency is generally monthly; the rest of the element can be customised accordingly.
Fees and Charges: Apart from Interest Rates, there are several other charges on a Personal Loan, such as processing fees (0.5% to 3%), application fees, late repayment fees, etc. We ensure complete transparency in all charges.
Credit Check: This is an inquiry credit history check of the borrower run by the lenders to ensure their repayment capabilities. A CIBIL score of 700+ is preferred for best rates.
Early Payment Options: Various lenders offer early or pre-pay options on their personal loans. With this, the borrower can repay their borrowed amount even before the completion of the repayment tenure. A few lenders also put charges on closing the loan early.