These days a personal loan is so popular that most of the money requirements are fulfilled by this only. Undoubtedly, a personal loan aims to lessen the borrower’s liabilities and save an enormous time of the borrowers and lenders alike. Technology advancement has led to a tremendous transformation in the financial market with a rising number of online availabilities of personal loan lenders. A personal loan online processing leads to the digital transaction in which the lender lends money to the borrower without any paperwork. So, if you are looking for a personal loan that you can also apply online for a personal loan from anywhere be it home, office or while traveling, etc.
Features of a Personal Loan
Here is why a personal loan is gaining popularity among loan seekers:
- Online Loan Process
The online personal loan processing facilitates a borrower to apply, complete the application form, upload the required documents and e-sign the loan agreement with the comfort of their home. Some lenders even offer discounts and other benefits like low personal loan interest rate, etc. on the online loan processing.
- Multipurpose Loan
A personal loan is a multipurpose loan like it can be used to fulfill any money requirement. Freedom on the usage of the loan amount is one of the best features of a personal loan.
- Unsecured Loan
A personal loan is a collateral-free loan. This means it can acquire without any security or guarantor. Personal loan keeps the borrower free from the risk of losing any sort of asset in case of default of the loan amount.
- Flexible Repayment Term
The flexible repayment tenure is offered to the applicant on a personal loan.
Every coin has two sides same goes with a personal loan so Understanding the Pros and Cons of an Unsecured Personal Loan is very important and to help you with this here are the advantages and disadvantages of the same.
- No Risk to Personal Property
When a personal loan is secured, it’s backed by collateral that your lender can take if you can’t pay off your loan.
- The Application Process Is Simpler
You can apply for a loan from a peer-to-peer lending site from the comfort of your own home. And it’s possible to get approved for one in less than 24 hours. Whether you qualify for a loan depends on your credit history and credit score.
- If you default on loan repayment
Even if a personal loan isn’t backed by a particular piece of personal property, a lender may still be able to place a lien on your assets in order to secure repayment. After it’s all said and done, you could end up with a stain on your credit report and your wages could be garnished in the event of a successful lawsuit.
- Loan Amounts May Be Smaller
Lenders go to great lengths to limit the risk of borrower default.
- Rates and Payments Are Higher
How much higher the rates are depends on your credit score and the amount of money you’re borrowing. And the longer your repayment period, the more you’ll pay in interest.
Generic eligibility criteria for a Personal Loan
- An applicant can have an optimum repayment record or credit score.
- An applicant minimum age should not be less than 21 years old and a maximum of 58 years old.
- You should have completed 2 years of employment with Mahindra and Mahindra Limited.
- Duly-filled personal loan application form.
- An applicant’s passport size photographs.
- Identity Proof
- Proof of Age
- Address proof
- Proof of Income
- Profession Proof
- PAN card copy.
But if you have a bad credit score then how can you get an instant personal loan. As you must be aware that a credit score plays an important role in the loan approval. But do not worry as we have provided of the ways through which you can get best bad credit personal loan in 2020. So do have a look:
- Prove that your income can support EMI payments
If you have a high income or have an additional source of income, a lender may consider your application for a personal loan even if you have a bad credit score.
- Ask for a lower personal loan amount
Try to ask for a low amount of loan as asking for a high amount with a low credit score will only indicate more risk to the lender. But if you apply for a lower amount of an instant personal loan, a lender may feel more comfortable approving your loan application.
- Apply with a co-applicant or secure a guarantor
In case you have a bad credit score you can avail of an instant personal loan by involving a co-applicant or a guarantor. As if the lender finds the co-applicant or guarantor with a steady income and a better credit score, they are certainly more interested in approving an instant personal loan.
It is always better to improve your credit score before applying for an instant loan. Take a look at such tactics that will help you improve your credit score.
- Regular EMI payments: Set reminders for the constant payment and to be more disciplined with credit. Your repayment of outstanding debt can have a major impact on your credit score.
- Ensure You Maintain Older Credit Cards to Lengthen Credit History: If you have old credit cards, you should continue to maintain them as long as you can pay your bills in full, on time. This will help you build a strong and lengthy credit history, which in turn will help you increase and maintain a good credit score in the future.
- Customize Your Credit Limit: Your credit utilization ratio has a significant impact on your credit score.
- Opt for a Longer Tenor when You Take a Loan: This will ensure that your EMI is low, and so, you can make payments on time.
- Try to take one loan at One Time: The number of loans you take in a fixed period should be minimal. If you take multiple loans at once, it will show that you are in an unforgiving cycle where you have insufficient funds.
- Check Your CIBIL Report for Mistakes and Rectify Them: So, ensure that you check your CIBIL report from time to time. You can get a free credit score by simply adding some basic details.
- Create a good Credit History: If you haven’t borrowed funds in the past, you won’t have a credit history and as a result, your CIBIL score will be low. So, ensure that you borrow a healthy mix of credits, both secure and unsecured loans, of a long and short tenor to build a strong credit score. This will help you access low-interest rates and higher loan amounts in the future whenever you choose to apply for a personal loan.
Tips for choosing the Best Personal Loan Lender
- Look beyond the interest rate:If a borrower prepays the loan a sizeable interest cost can be saved. Traditional personal loan interest rates are typically lower than an instant personal loan. A borrower should ensure the clarity of the processing fee, late payment charge, and other cost structures. Every lender’s processing fee varies based on the many factors.
- Check on declining borrowing limit: Being unsecured, an instant personal loan may reduce the borrowing ability of a borrower until the time it is settled.
- Ensure the security of the information: A borrower should be ensuring that the digital footprint is imperative.