Many banks and NBFCs offer loans for various purposes. Banks have many types of loans for specific reasons, such as cars, homes, education, etc. Then there are personal loans for weddings, trips, shopping, and other personal costs.
A personal loan is entirely flexible, and several loans are available to meet the borrower’s various needs. These loans have different terms than typical personal loans that banks or NBFCs issue. So, what kind of personal loan suits you? We’ll be discussing different types of personal loans in this article.
What is a Personal Loan?
Personal loans are unsecured loans. A personal loan is one of India’s most widely used types of loans. The accessibility of personal loans makes it simple to apply. The amount and interest rate of the personal loan depend on the lender and the borrower’s credit criteria.
Eligibility for Personal Loans
The personal loan eligibility requirements differ from one lender to another. However, the following are the standard eligibility criteria for a personal loan in India:
- Applicants for personal loans must be between the ages of 21 and 60.
- Should be an Indian citizen.
- Should have a minimum of 12 months of work experience.
- Should be employed at their current company for more than six months.
- Should have a monthly income of at least Rs 25,000.
Different Types of Personal Loans in India in 2022
1. Medical emergency loan
An unexpected medical emergency can put one in a difficult financial situation. The cost of medications, hospital stays, and other bills can add up quickly. A personal loan for a medical emergency prevents someone from giving in to financial pressure. Usually, this money is used to cover unforeseen medical costs. One may handle his/her healthcare expenses with an emergency fund from a personal loan. They can do so without emptying their savings.
2. Home renovation loan
Personal loans for home renovations allow one to purchase new furnishings, appliances, etc., for his/her new residence. They usually do not need to submit any security for the loan, and the sum is generally relatively large. These loans have a higher interest rate than short-term loans, which makes them less preferred overall, although they can be used for emergencies.
One can borrow up to 75–80% of his or her equity’s worth for home improvement loans. To get a loan, you have to show that you are eligible and have enough money to pay it back.
3. Education loan
Higher education is often costly, and most people find it hard to bear the expenses. One might want to receive a higher education, but tuition costs and other expenses stand in the way. To overcome that, they can easily apply for a personal loan for education.
They can use this personal loan for higher education instead of giving up the chance to study at the college of their dreams. The money from such a personal loan might be used to pay for travel, living expenses, and the entire cost of their course.
4. Wedding loan
From the ceremony to the reception, a wedding requires a significant financial outlay. With low interest rates, borrowers can apply for personal loans for weddings between Rs. 25,000 and Rs. 3,000,000. Additionally, the loan has no additional fees. It can be applied for online with a quick loan approval process by completing a video KYC and uploading a scanned copy of one’s identification documentation.
For many, traveling is one of life’s most revitalizing and fascinating experiences. Some people travel to get away from their boring everyday lives, while others do it to learn about new places, cultures, traditions, foods, etc.
Many banks provide travel loans. One can use this money to enjoy their travel adequately. They can apply online for an instant travel loan of up to Rs 3,00,000 at low-interest rates with a quick and straightforward loan approval process.
6. Loan for debt consolidation
Daily expenditures might trap one in a loop of only making minimum payments on their credit cards, adding up to a significant sum over time. A personal loan for debt consolidation is used to pay off debt with a more substantial balance. One can avoid paying high interest rates on credit cards and other loans by taking out this no-collateral loan. Many NBFCs and banks frequently offer secured and unsecured personal loans for debt consolidation.
7. Pension Loan
Pension loan applicants must be retired professionals. As a result, the standard eligibility requirements do not apply to this personal loan. In this case, some banks offer this kind of personal loan several times the pension the borrower would have received in the month before applying for the loan. Pension proof must be provided for the personal loan eligibility calculation. Pensioners can borrow money for any purpose, including everyday expenses or medical costs.
8. Agricultural Loan
It’s a personal loan to assist farmers with out-of-pocket costs associated with farming. Loans are typically provided by private banks in India. However, they may also be provided by other financial institutions. Due to the fact that farms often need money for these kinds of tasks, this type of loan is pretty common in rural areas.
This loan has the significant benefit of not charging interest and having a longer period to allow them to pay it back.
One can quickly get these loans if one knows where to look and has a decent CIBIL score. Obtaining a personal loan can be their best option if their credit is poor but not too poor to apply. Personal loans are beneficial because no security, such as gold or real estate, is needed. One can only get one loan at a time, because the 15% interest on a single loan goes up a lot when added to other debts.
Moreover, one should research and apply only for the personal loan that suits them best. And visit our website to read more such blogs on loans and personal finances. They can also check out the housing and personal loan sections if they plan to get one.