February 15, 2010 by akhilendra

Personal Loan

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Today we live in a material world. Our needs have grown many folds. Expenses are high and income is often not enough to contain it. To manage our financial need, we use many financial instruments. Investment in equity, mutual fund and life insurance are probably the most commonly used such instruments.  Savings do take long time to accumulate therefore we can’t use them in near term to fulfill our need like buying cars and home. For acquiring these assets we generally opt for home and car loan. There are certain situations where we neither have to buy a car or home but we need cash. But we are always not ready for any kind of urgency or just another big shopping. There are secured and unsecured loans for these kinds of situations.

Personal loan is the most common form of loan in today’s world. It is extensively used to avail cash. These are unsecured loan and readily available in the market. They can be used for any purpose like wedding, paying big credit card bills, medical emergency, and home renovation or even buying a LCD. The amount for loan varies from banks to banks but in general the range is 50000-200000. The process is fast and doesn’t require too many documents. These features make it very lucrative and more and more people are going for them. But personal loans are very tricky and generally come with higher rate of interest.  They are repayable in equal monthly installments and the tenure ranges from 1 to 5 year.

The maximum amount of loan for an individual depends upon her/his net take home salary. Most of the banks offer personal loan nowadays and it forms a very important part their product portfolio. Though, there are advantages like no security is required, no need of declaring purpose and faster processing but one need to be careful while availing one. These are probably the most expensive type of loan and one may end up paying huge amount of money as interest only. Nowadays, it depends upon a lot on credit rating of applicant which banks avail from CIBIL, a credit rating agency.

Earlier, CIBIL ratings were only open to banks and only banks have option to know about it. Now even we can know our rating. Better rating helps in cracking better. Banks do charge considerable amount of money as processing fee. Before going for any particular bank, make sure to negotiate the deal well and go through the fine prints of the documents and know completely about the products. All banks offer personal loan, names of few major banks are;

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