In the dynamic world of personal finance, where financial needs often arise unexpectedly, the role of Personal Loans cannot be underestimated.In recent years,instant Personal Loans have emerged as a game-changer, offering swift financial assistance when needed.
This post will explore the four types of Personal Loans in India. You will learn how they work and the essential documents required for approval to ensure a smooth borrowing experience.
Top 4 – Types of Personal Loans
Personal Instalment Loan
A personal instalment loan is popular for individuals seeking financial assistance for various purposes, such as medical expenses, education, or home renovation. This type of loan provides borrowers with a lump sum upfront, which is then repaid in fixed monthly instalments over a predetermined period.
Borrowers know how much they must repay each month, making budgeting easier. These loans often come with fixed interest rates, so the interest payments remain stable throughout the loan tenure.
Personal instalment loans suit those who prefer structured repayment and need funds for specific, one-time expenses. Banks and financial institutions offer them and require applicants to meet specific eligibility criteria, such as a minimum income threshold and a good credit score.
Line of Credit
A line of credit (LOC) is a pre-approved loan amount that you can borrow from a bank as needed. It allows the borrower to access a set amount of money, up to a certain limit, as needed. The borrower only pays interest on the amount of money they actually use.
In other words, an LOC is like a credit card, but with a higher borrowing limit and more flexibility. You can withdraw money from your LOC at any time, as long as you don’t exceed your limit. Once you repay the money, you can borrow it again.
LOCs are a good option for people who need access to cash on short notice, or who have variable income. They can be used for a variety of purposes, such as covering unexpected expenses, consolidating debt, or funding a home improvement project.
A standout feature of this loan is its convenience. It acts as a financial safety net, ready for use during emergencies or whenever you require funds. Borrowers can also repay the borrowed amount at their own pace, making it highly adaptable to individual financial situations.
Banks and credit institutions offer them, and approval is based on creditworthiness and income.
Funds Transfer or Balance Transfer
Funds Transfer or Balance Transfer loans are a strategic tool for individuals looking to consolidate their debts and reduce the burden of high-interest credit card debts or other outstanding loans. With this type of loan, you can transfer existing obligations from multiple sources onto a single loan account, often at a lower interest rate.
The primary advantage is the potential for significant interest savings. By consolidating high-interest debts, you can lower your overall interest payments and simplify your finances. It can help you pay off your debts faster and with less financial strain.
These loans are an excellent option for individuals looking to regain control over their finances and reduce their interest costs. Banks and financial institutions typically offer Funds Transfer or Balance Transfer loans, and eligibility criteria may include a good credit score and a minimum debt transfer amount.
Top-up Loan
A top-up loan is an additional loan that a borrower can take on top of their existing Personal Loan. It is usually offered by the same lender as the existing loan. As the name suggests, top-up loans are available to borrowers who already have a Personal Loan. You can apply for this loan after 9 months of your Personal Loan sanction.
What makes a top-up loan stand out is its unique ability to provide borrowers with additional funds quickly and conveniently, using their existing loan as collateral. This type of loan offers competitive interest rates and the flexibility to utilise the funds for various purposes.
Its simplified process, flexible repayment with convenient EMIs and faster processing make it an attractive option for individuals seeking extra funds, all while leveraging their existing financial relationships with lenders. These loans are a flexible and easy way to get the money you need, making them a good option for multiple financial needs.
Documents Required for Instant Personal Loans
While instant Personal Loansoffer quick access to funds, you must provide essential documents to prove your eligibility and credibility.
Here’s a detailed breakdown of the documents required for Personal Loan:
- Identity Proof: To verify your identity, lenders accept documents like Aadhaar cards, PAN cards, passports, or voter ID.
- Address Proof: Utility bills, rental agreements, or an Aadhaar card displaying your current address can serve as address proof.
- Income Proof: To demonstrate your capacity to repay the loan, you must provide income proof. Salaried individuals can use their salary slips, bank statements, or Form 16. Self-employed individuals can submit their income tax returns or profit and loss statements.
- Employment Proof: Salaried individuals must furnish a copy of their employment offer or employer-issued confirmation letter.
- Recent Passport-Size Photographs: Keep a few passport-size photographs ready, as most loan applications require them for documentation.
- Bank Statements: Some lenders may request bank statements to assess your financial stability and repayment capability.
Conclusion
Instant Personal Loans have revolutionised how Indians address financial emergencies and seize opportunities. Armed with knowledge about required documents and the ease of online applications, accessing financial assistance has never been more straightforward. However, it’s essential to borrow wisely and choose a reputable lender.
With instant Personal Loans, financial freedom is within reach, allowing you to navigate your financial journey confidently. So, the next time you encounter a financial need, consider an instant Personal Loan and ensure you have the documents ready for a streamlined borrowing experience. Your financial peace of mind is just a few clicks away!
