Understanding of Personal Loan

A personal loan is a type of unsecured loan provided by financial institutions to meet personal financial needs. Unlike loans that are designated for specific purposes (like home or auto loans), personal loans offer flexibility and can be used for various reasons. They are usually granted based on an individual’s income, credit score, and repayment capacity.

Key Features of a Personal Loan

• Unsecured Loan: No collateral or security is required.
• Flexible Usage: Can be used for weddings, medical emergencies, travel, education, home renovation, or debt consolidation.
• Fixed Loan Amount: The amount is predetermined and approved by the lender.
• Fixed Tenure: Loan repayment is scheduled over a specific period (1 to 5 years typically).
• Interest Rates: Based on the borrower’s credit profile; usually higher than secured loans.
• Quick Processing: Minimal documentation and fast disbursement.