The current economic slump has been challenging for the people in India and the rest of the world. These challenging circumstances have driven many to look for alternative sources of funding, such as unsecured personal loans, one of the popular and reliable means of financing over time.
During these times of financial instability, individuals often rely on unsecured credits to sustain multiple funding requirements, including emergency healthcare assistance. So, here’s everything about these loans that you must be aware of.
Features and Benefits of unsecured personal advances
Several features and benefits of these unsecured personal loans contribute to their growing popularity. Some of them are listed below.
- No collateral required
Unlike secured loans, personal loans do not require a borrower to mortgage his/her assets as collateral to avail the loan amount. Therefore, such advances do not force you to put forward a personal property, ensuring a smoother and more convenient application and approval procedures.
- No end-use restrictions
In times of great financial hurdles, one can easily avail a personal loan and use the amount to fund several financial needs. Thus, with the principal sum, you can purchase consumer durable goods, pay off medical bills or utilise it for any other personal funding needs.
Regardless of the intent, unsecured loans can help fulfil almost any needs for an individual.
- Tax deductions in a few cases
Under general circumstances, personal loans do not offer any tax benefits to borrowers. Nevertheless, if one decides to utilise such credit for any of the following reasons, he/she can avail attractive tax deductions –
- Home renovation or improvements
- Construction or purchase of residential property
Eligibility criteria and documents required for personal loans
A potential borrower needs to meet specific requirements to become eligible for such advances. Although the exact eligibility criteria tend to differ among various lenders, the following basic pointers sum up the standard requirements to fulfil before you apply for a personal loan.
- A credit score above 750
An applicant must ensure that his/her credit rating meets the requirements set by a lender. Generally, NBFCs look for a CIBIL score of 750+ for personal loan applicants. Individuals holding lower scores carry a reduced chance of approval. Even though it is possible to avail a personal loan with bad CIBIL score, you must always strive to take necessary steps that help improve your score before sending the loan application.
- Regular and stable income
Financial institutions check a loan applicant’s monthly income thoroughly before approving to determine their repayment capacity. A borrower needs to have sufficient income to lead a financially stable life even after servicing personal loan EMIs. Salary slips and account statements are essential documents in proving an individual’s income.
- Applicant’s age
A potential borrower’s age can also determine whether he/she is suitable for an unsecured personal loan. Generally, lenders prefer borrowers aged between 23 and 55 years when it comes to salaried applicants.
Alongside, one’s citizenship and residential status also fall under the eligibility requirements. Besides, a desirable fixed obligation to income ratio (FOIR) between 30 and 50% works in an applicant’s favour when applying for the advance.
Individuals who have multiple loans running concurrently may face issues while availing a fresh personal loan. One of the simple ways to manage your debt is to repay one loan before availing another. This should keep your FOIR in the ideal range, boosting lender’s confidence in your ability to repay advances.
One can avail personal loans from lenders like Bajaj Finserv by fulfilling minimal eligibility criteria. The company offers high-valued loans, ranging up to Rs.25 lakh for eligible applicants.
It also streamlines and accelerates the lending process via pre-approved offers. These offers are available on various types of loans, including personal loans, business loans and more. You can check your pre-approved offers by submitting your name and phone number.
Thus, individuals undergoing financial shortage can seek assistance in the form of a personal loan. Affordable rates and flexible tenor can help service such loans without creating any unnecessary financial strain on borrowers.