A personal loan is the best option for paying off debt, financing a car, or covering a large expense such as a wedding or education. Personal loans can be used to cover various personal expenses and help with repayments.
Online lenders, regional banks, and credit unions all offer loans, and the money is given to the borrower all at once. Personal loans are usually unsecured, so you won’t need to put up any collateral to get one.
Let’s now know what you should know about personal loans, interest rates, and the assistance you can get from ABC in closing personal loans.
What is a personal loan?
A personal loan is the amount of money you obtain from a bank or other financial institution, intending to repay it over a fixed period with regular monthly payments. You must repay the borrowed funds plus interest.
Additionally, some lenders may charge fees for personal loans. Moreover, your lender will probably notify the credit bureaus of any account activity throughout the loan’s term. You can establish a solid credit history by paying your bills on time.
A personal loan typically has a fixed repayment date by which you must repay the loan amount before finally closing your loan account.
Uses of a Personal Loan
The use of the loan amount is totally up to you. The lender usually does not specifically ask for the reason before providing the loan. However, there are some common uses of personal loans, as follows:
- Debt Repayment
You can pay off your credit card debts or clear your borrowing amounts with other debtors. Personal loans for these kinds of things tend to have lower interest rates and help people pay off personal loans by giving them options for low monthly payments.
- Incurring important costs
Big events such as weddings, ceremonies, and hosting functions require financing to cover the remaining costs. You can take out personal loans with a fixed repayment time and a reasonable interest rate to slowly pay off the loan amount.
- Education Fees
While sending your children abroad for higher studies or covering their college fees might require you to have stable finances. Personal loans are the best at helping you keep a lump sum of money to make such payments on time.
Personal investments such as education expenses, investing in stocks and shares, or financing your own business require upfront payments. Personal loans can help you pay for things that will make you look and feel better about yourself.
- Property Renovation or Repair
You can take an unsecured personal loan for house remodelling, repairs, or renovation. Since they require no collateral and have seamless options for a closing personal loan. Unsecured personal loans are better than home equity products, where one has to put their home up as collateral.
- Personal Emergencies
Personal loans take only a few days to process and get approved. In case of certain emergencies, such as medical bills or funeral expenses, you can choose a personal loan to pay them off.
Types of Personal Loans
Different loan types are suitable for other borrowers, regardless of whether they are financing a big event, a purchase, or something more specifically personal. It’s a good idea to become familiar with these loan types and their finer points, such as repayment terms and credit requirements.
- Education Loan:
Personal loans of up to Rs 20 lakh can be used to cover everything from your children’s tuition fees to their higher education costs. They have long repayment tenures of up to 15 years, with interest rates starting at 6.35%.
- Wedding Loan:
In India, weddings hold great significance and are celebrated like festivals. Personal loans help make the special day memorable by facilitating loans up to Rs. 25 lakh. The repayment tenures are up to 6 years with minimum documentation and processing.
- Home Renovation Loans:
Personal loans help finance your house’s repair, renovation, and remodelling costs. It helps increase your property’s economic real estate value as well. Loan amounts of up to Rs 40 lakh are available, with an interest rate of 6.85%.
The Process to Close a Personal Loan
Consider closing personal loans when you have extra cash to avoid being tied to them. Most banks allow you to pre-close a personal loan by paying the balance in full after six instalments at any time. You can choose from the following:
- Personal Loan Closures: You pay the lender through regular EMIs before the due date and issue a No Objection Certificate to close the loan.
- Personal Loan Pre-Closures: You pay the remaining loan before the fixed repayment tenure. You can do this after a minimum of 6 to 12 EMIs are successfully delivered.
- Partly Payments of Loan: You are running short of cash, and ask the lender to reduce the monthly EMI amount.
The process for closing personal loans is as follows:
- Visit your bank’s nearest branch and ask for a loan closure application.
- Read the application carefully and fill in the required details.
- Produce the required documents for the bank officials.
- Make the payment with cash, a demand draft, or a cheque.
- The bank will give you an acknowledgement letter, which you need to keep safe.
- The bank will send the final closure details to you after a few days.
Documents Required for Closing Personal Loans
Before closing a personal loan, you are required to bring along the following documents:
- Information about loan
- Identity Proof: Aadhaar Card, PAN, etc.
- Proof of address: an electricity bill, a water bill, a utility bill, etc.
- Details of EMIs paid to date;
- Demand Draft or Cheque.
A personal loan might be the ideal solution if you require financial assistance but prefer the security of a perfect repayment schedule and a fixed monthly payment.
Piramal Finance can advise on what types of personal loans might be available and the types of borrowing for which you stand the best chance of being approved. Your current bank or credit agency might be your best choice when searching for personal loans.
Take action now to become an attractive borrower by raising your credit score and keeping other debts to a minimum to get the best loan rates and terms. If you still have any queries, contact Piramal Finance for advice on closing personal loan or other financial assistance.